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Adagene Inc.

Adagene Inc.ADAGEarnings & Financial Report

Nasdaq · Health Care

Adagene Inc. is a global clinical-stage biotechnology company specializing in the research, development, and commercialization of innovative antibody-based cancer immunotherapies. Leveraging its proprietary next-generation antibody technology platforms, it develops targeted oncology treatments for patients across global markets, with core R&D bases in China and clinical programs covering North America, Asia, and Europe.

What changed in Adagene Inc.'s 20-F — 2023 vs 2024

Top changes in Adagene Inc.'s 2024 20-F

587 paragraphs added · 563 removed · 476 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

118 edited+29 added−18 removed929 unchanged
For details, see page 80 of this annual report; and ● If a U.S. person is treated as owning 10% or more of our stock by vote or value, such person may be subject to adverse U.S. federal income tax consequences. For details, see page 80 of this annual report.
For details, see page 80 of this annual report; and ● If a U.S. person is treated as owning 10% or more of our stock by vote or value, such person may be subject to adverse U.S. federal income tax consequences.
Clinical trials can be delayed, suspended, or terminated for a variety of reasons, including the following: ● delays in or failure to obtain regulatory authorization to commence a trial; ● delays in or failure to obtain institutional review board, or IRB, approval at each site; ● delays in or failure to reach agreement on acceptable terms with prospective contract research organizations (CROs), and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● difficulty in recruiting clinical trial investigators of appropriate competencies and experience; ● delays in establishing the appropriate dosage levels in clinical trials; ● delays in or failure to recruit and enroll suitable patients to participate in a trial, particularly considering study inclusion and exclusion criteria and patients’ prior lines of therapy and treatment; ● the difficulty in certain countries in identifying the sub-populations that we are trying to treat in a particular trial, which may delay enrollment and reduce the power of a clinical trial to detect statistically significant results; ● lower than anticipated retention rates of patients in clinical trials; ● failure to have patients complete a trial or return for post-treatment follow-up; ● clinical sites deviating from trial protocol or dropping out of a trial; ● delays adding new investigators or clinical trial sites; ● safety or tolerability concerns could cause us or our collaborators or governmental authorities, as applicable, to suspend or terminate a trial if it is found that the participants are being exposed to unacceptable health risks, undesirable side effects or other unfavorable characteristics of the product candidate, or if such undesirable effects or risks are found to be caused by a chemically or mechanistically similar therapeutic or therapeutic candidate; ● our third-party research contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● changes in regulatory requirements, policies and guidelines; ● failure to comply with the applicable regulatory requirements through the clinical process; 33 Table of Contents ● manufacturing sufficient quantities of a product candidate for use in clinical trials; ● the quality or stability of a product candidate falling below acceptable standards; ● changes in the treatment landscape for our target indications that may make our product candidates no longer relevant; and ● third-party actions claiming infringement by our product candidates in clinical trials outside the United States and obtaining injunctions interfering with our progress.
Clinical trials can be delayed, suspended, or terminated for a variety of reasons, including the following: ● delays in or failure to obtain regulatory authorization to commence a trial; ● delays in or failure to obtain institutional review board, or IRB, approval at each site; ● delays in or failure to reach agreement on acceptable terms with prospective contract research organizations (CROs), and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● difficulty in recruiting clinical trial investigators of appropriate competencies and experience; ● delays in establishing the appropriate dosage levels in clinical trials; 33 Table of Contents ● delays in or failure to recruit and enroll suitable patients to participate in a trial, particularly considering study inclusion and exclusion criteria and patients’ prior lines of therapy and treatment; ● the difficulty in certain countries in identifying the sub-populations that we are trying to treat in a particular trial, which may delay enrollment and reduce the power of a clinical trial to detect statistically significant results; ● lower than anticipated retention rates of patients in clinical trials; ● failure to have patients complete a trial or return for post-treatment follow-up; ● clinical sites deviating from trial protocol or dropping out of a trial; ● delays adding new investigators or clinical trial sites; ● safety or tolerability concerns could cause us or our collaborators or governmental authorities, as applicable, to suspend or terminate a trial if it is found that the participants are being exposed to unacceptable health risks, undesirable side effects or other unfavorable characteristics of the product candidate, or if such undesirable effects or risks are found to be caused by a chemically or mechanistically similar therapeutic or therapeutic candidate; ● our third-party research contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● changes in regulatory requirements, policies and guidelines; ● failure to comply with the applicable regulatory requirements through the clinical process; ● manufacturing sufficient quantities of a product candidate for use in clinical trials; ● the quality or stability of a product candidate falling below acceptable standards; ● changes in the treatment landscape for our target indications that may make our product candidates no longer relevant; and ● third-party actions claiming infringement by our product candidates in clinical trials outside the United States and obtaining injunctions interfering with our progress.
Our existing strategic partnerships, collaborations and any future strategic partnerships we enter into may pose a number of risks, including the following: ● we may not be able to enter into critical strategic partnerships or enter into them on favorable terms; ● strategic partners or collaborators have significant discretion in determining the effort and resources that they will apply to such a partnership, and they may not perform their obligations as agreed, expected, or in compliance with applicable legal requirements; ● strategic partners or collaborators may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the partners’ strategic focus or available funding, or external factors, such as an acquisition that diverts resources or creates competing priorities; ● strategic partners or collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; ● strategic partners or collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the strategic partners or collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than our product candidates; ● product candidates discovered in collaboration with us may be viewed by our strategic partners or collaborators as competitive with their own product candidates or products, which may cause strategic partners or collaborators to cease to devote resources to the commercialization of our product candidates; 44 Table of Contents ● a strategic partner or collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product candidates; ● disagreements with strategic partners or collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; ● strategic partners or collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; ● strategic partners or collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; ● strategic partners or collaborators may claim for a substantial compensation for our failure of development of the product candidates specified under the relevant out-licensing agreements that solely arose out of problems of our previous R&D basis; and ● strategic partnerships or collaborations may be terminated for the convenience of the partner or the collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
Our existing strategic partnerships, collaborations and any future strategic partnerships we enter into may pose a number of risks, including the following: ● we may not be able to enter into critical strategic partnerships or enter into them on favorable terms; ● strategic partners or collaborators have significant discretion in determining the effort and resources that they will apply to such a partnership, and they may not perform their obligations as agreed, expected, or in compliance with applicable legal requirements; ● strategic partners or collaborators may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the partners’ strategic focus or available funding, or external factors, such as an acquisition that diverts resources or creates competing priorities; ● strategic partners or collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; ● strategic partners or collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the strategic partners or collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than our product candidates; ● product candidates discovered in collaboration with us may be viewed by our strategic partners or collaborators as competitive with their own product candidates or products, which may cause strategic partners or collaborators to cease to devote resources to the commercialization of our product candidates; ● a strategic partner or collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product candidates; 44 Table of Contents ● disagreements with strategic partners or collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; ● strategic partners or collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; ● strategic partners or collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; ● strategic partners or collaborators may claim for a substantial compensation for our failure of development of the product candidates specified under the relevant out-licensing agreements that solely arose out of problems of our previous R&D basis; and ● strategic partnerships or collaborations may be terminated for the convenience of the partner or the collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information.
If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information.
We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful.
We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful.
These risks could result in a material change in our operations and the value of our ordinary shares or the ADSs, or could significantly limit or completely hinder our ability to conduct our business, accept foreign investments, or maintain listing on Nasdaq or listing on other foreign exchange, and offer or continue to offer securities to investors, and cause the value of such securities to significantly decline or become worthless. 5 Table of Contents You should carefully consider all of the information in this annual report before making an investment in the ordinary shares or ADSs.
These risks could result in a material change in our operations and the value of our ordinary shares or the ADSs, or could significantly limit or completely hinder our ability to conduct our business, accept foreign investments, maintain listing on Nasdaq or list on other foreign exchange, and offer or continue to offer securities to investors, and cause the value of such securities to significantly decline or become worthless. 5 Table of Contents You should carefully consider all of the information in this annual report before making an investment in the ordinary shares or ADSs.
If a U.S. person is treated as owning (directly, indirectly or constructively) 10% or more of our stock (including our ADSs and ordinary shares) by value or voting power, such person generally will be treated as a “United States shareholder” with respect to each “controlled foreign corporation,” or CFC, in our group.
If a U.S. person is treated as owning (directly or indirectly) 10% or more of our stock (including our ADSs and ordinary shares) by value or voting power, such person generally will be treated as a “United States shareholder” with respect to each “controlled foreign corporation,” or CFC, in our group.
A CFC is a non-U.S. corporation more than 50% of the stock (by voting power or value) of which is owned (directly, indirectly or constructively) by “United States shareholders.” We have not determined whether we are a CFC.
A CFC is a non-U.S. corporation more than 50% of the stock (by voting power or value) of which is owned (directly or indirectly) by “United States shareholders.” We have not determined whether we are a CFC.
For details, see page 36 of this annual report. ● Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
For details, see page 37 of this annual report. ● Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
Pursuant to the HFCAA and the Consoldiated Appropriations Act, 2023, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
Pursuant to the HFCAA and the Consolidated Appropriations Act, 2023, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
Our ability to generate product revenue and achieve profitability depends on, among other things: ● completing research and development of our product candidates; ● initiating, enrolling patients in and completing clinical trials of product candidates on a timely basis; ● obtaining regulatory approvals and marketing authorizations for any product candidates for which we complete clinical trials; ● developing and maintaining adequate manufacturing capabilities either by ourselves or in connection with third-party manufacturers; ● launching and commercializing any product candidates for which we obtain regulatory approvals and marketing authorizations; ● establishing a sales, marketing and commercialization team for any future products for which we may obtain regulatory approval; ● seeking to identify additional product candidates; ● addressing any competing technological and market developments; and ● maintaining, protecting and expanding our portfolio of intellectual property rights.
Our ability to generate product revenue and achieve profitability depends on, among other things: ● completing research and development of our product candidates; ● initiating, enrolling patients in and completing clinical trials of product candidates on a timely basis; ● obtaining regulatory approvals and marketing authorizations for any product candidates for which we complete clinical trials; ● developing and maintaining adequate manufacturing capabilities either by ourselves or in connection with third-party manufacturers; ● launching and commercializing any product candidates for which we obtain regulatory approvals and marketing authorizations; ● establishing a sales, marketing and commercialization team for any future products for which we may obtain regulatory approval; ● seeking to identify additional product candidates; ● addressing any competing technological and market developments; and 27 Table of Contents ● maintaining, protecting and expanding our portfolio of intellectual property rights.
Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of the PRC National People’s Congress, or NPC, which was lastesd revised in June 2022 and came into effect in August 2022, requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the State Council’s anti-monopoly law enforcement authority before they can be completed.
Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of the PRC National People’s Congress, or NPC, which was last revised in June 2022 and came into effect in August 2022, requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the State Council’s anti-monopoly law enforcement authority before they can be completed.
For details, see page 74 of this annual report; 8 Table of Contents ● We were likely a passive foreign investment company, or PFIC, for 2023, and there is a significant risk that we will be a PFIC for 2024 and possibly subsequent taxable years, in which case U.S. investors will generally be subject to adverse U.S. federal income tax consequences.
For details, see page 74 of this annual report; 8 Table of Contents ● We were likely a passive foreign investment company, or PFIC, for 2024, and there is a significant risk that we will be a PFIC for 2025 and possibly subsequent taxable years, in which case U.S. investors will generally be subject to adverse U.S. federal income tax consequences.
A failure of one or more clinical trials can occur at any stage of the process. We will be required to demonstrate with substantial evidence through well-controlled clinical trials that our product candidates are safe, pure, and effiective for use in a diverse patient population before we can seek final regulatory approvals for their commercial sale.
A failure of one or more clinical trials can occur at any stage of the process. We will be required to demonstrate with substantial evidence through well-controlled clinical trials that our product candidates are safe, pure, and effective for use in a diverse patient population before we can seek final regulatory approvals for their commercial sale.
Because of the numerous risks and uncertainties associated with our product development, we are unable to accurately predict the timing and amount of our operating expenditures, which will depend largely on: ● the scope, timing, progress, costs and results of discovery, preclinical development, laboratory testing and clinical development activities of our current product candidates; ● the number, scope, progress and results of preclinical and clinical programs we decide to pursue; ● the progress of the development efforts of parties with whom we have entered or may in the future enter into collaborations and research and development agreements; ● our ability to maintain our current licenses, research and development programs, and to establish new collaboration arrangements; ● our ability to maintain competitive advantage over other AI-powered technology platforms at generating highly differentiated product candidates. ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; ● the cost, timing and outcome of regulatory review of any of our product candidates; ● the costs and timing of future commercialization activities, including manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive marketing approval; ● the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; and ● our efforts to enhance operational systems and hire additional personnel, including personnel to support development of our product candidates and satisfy our obligations as a public company.
Because of the numerous risks and uncertainties associated with our product development, we are unable to accurately predict the timing and amount of our operating expenditures, which will depend largely on: ● the scope, timing, progress, costs and results of discovery, preclinical development, laboratory testing and clinical development activities of our current product candidates; ● the number, scope, progress and results of preclinical and clinical programs we decide to pursue; ● the progress of the development efforts of parties with whom we have entered or may in the future enter into collaborations and research and development agreements; ● our ability to maintain our current licenses, research and development programs, and to establish new collaboration arrangements; ● our ability to maintain competitive advantage over other technology platforms at generating highly differentiated product candidates. ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; 28 Table of Contents ● the cost, timing and outcome of regulatory review of any of our product candidates; ● the costs and timing of future commercialization activities, including manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive marketing approval; ● the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; and ● our efforts to enhance operational systems and hire additional personnel, including personnel to support development of our product candidates and satisfy our obligations as a public company.
We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons, including: ● severity of the disease under investigation; ● the size and nature of the patient population; ● the patient eligibility criteria defined in the protocol; ● the size of the study population required for analysis of the trial’s primary endpoints; ● perceived risks and benefits of our pipeline products; ● our resources to facilitate timely enrollment in clinical trials; ● patient referral practices of physicians; ● the proximity of patients to trial sites; ● th e design of the trial; ● our ability to recruit clinical trial investigators with the appropriate competencies and experience; ● our ability to obtain and maintain patients’ consent; and ● the risk that patients enrolled in clinical trials will not complete a clinical trial.
We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons, including: ● severity of the disease under investigation; 35 Table of Contents ● the size and nature of the patient population; ● the patient eligibility criteria defined in the protocol; ● the size of the study population required for analysis of the trial’s primary endpoints; ● perceived risks and benefits of our pipeline products; ● our resources to facilitate timely enrollment in clinical trials; ● patient referral practices of physicians; ● the proximity of patients to trial sites; ● th e design of the trial; ● our ability to recruit clinical trial investigators with the appropriate competencies and experience; ● our ability to obtain and maintain patients’ consent; and ● the risk that patients enrolled in clinical trials will not complete a clinical trial.
For details, see page 30 of this annual report; ● Any failures or setbacks in our platforms or our other proprietary technologies could negatively affect our business and financial condition. For details, see page 30 of this annual report; ● Our product candidates, for which we intend to seek approval as biologic products, may face competition sooner than anticipated.
For details, see page 31 of this annual report; ● Any failures or setbacks in our platforms or our other proprietary technologies could negatively affect our business and financial condition. For details, see page 31 of this annual report; ● Our product candidates, for which we intend to seek approval as biologic products, may face competition sooner than anticipated.
To date, we have obtained bulk drug substance for ADG126, ADG116, ADG206 and ADG106 from a single-source third-party contract manufacturer. Any reduction or halt in supply of the drug substance from such contract manufacturer could severely constrain our ability to develop our product candidates until a replacement contract manufacturer is found and qualified.
To date, we have obtained bulk drug substance for ADG126, ADG116, ADG206 and ADG106 from a third-party contract manufacturer. Any reduction or halt in supply of the drug substance from such contract manufacturer could severely constrain our ability to develop our product candidates until a replacement contract manufacturer is found and qualified.
Due to the volatility of our market capitalization, there is a significant risk that we will also be a PFIC for 2024 and possibly future taxable years. In addition, the extent to which our goodwill and other intangible assets should be characterized as a non-passive asset is not entirely clear.
Due to the volatility of our market capitalization, there is a significant risk that we will also be a PFIC for 2025 and possibly future taxable years. In addition, the extent to which our goodwill and other intangible assets should be characterized as a non-passive asset is not entirely clear.
Compliance or the failure to comply with such laws could increase the costs of our products and services, limit their use or adoption, and otherwise negatively affect our operating results and business.” 17 Table of Contents On February 24, 2023, the CSRC and other PRC governmental authorities jointly issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Confidentiality Provisions”), which came into effect on March 31, 2023.
Compliance or the failure to comply with such laws could increase the costs of our products and services, limit their use or adoption, and otherwise negatively affect our operating results and business.” On February 24, 2023, the CSRC and other PRC governmental authorities jointly issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Confidentiality Provisions”), which came into effect on March 31, 2023.
If we are unable to successfully identify new product candidates, complete clinical development, obtain regulatory approval and commercialize our product candidates, or experience significant delays in doing so, our business will be materially harmed. For details, see page 31 of this annual report.
If we are unable to successfully identify new product candidates, complete clinical development, obtain regulatory approval and commercialize our product candidates, or experience significant delays in doing so, our business will be materially harmed. For details, see page 32 of this annual report.
In addition, we may be required to withhold taxes from dividends, and non-PRC shareholders (including ADS holders) may be subject to PRC tax on gains realized on the sale or other disposition of ADSs or ordinary shares, if such income is treated as sourced from within the PRC, as described below under “Item 3.D.Risk Factors—Risks Related to the ADS—You may be subject to PRC income tax on dividends from us or any gain realized on the transfer of our ADSs.” 18 Table of Contents You may be subject to PRC income tax on dividends from us or on any gain realized on the transfer of our ADSs.
In addition, we may be required to withhold taxes from dividends, and non-PRC shareholders (including ADS holders) may be subject to PRC tax on gains realized on the sale or other disposition of ADSs or ordinary shares, if such income is treated as sourced from within the PRC, as described below under “Item 3.D.Risk Factors—Risks Related to the ADS—You may be subject to PRC income tax on dividends from us or any gain realized on the transfer of our ADSs.” You may be subject to PRC income tax on dividends from us or on any gain realized on the transfer of our ADSs.
Because we have limited financial and managerial resources, we focus on research programs and product candidates for specific targets. As a result, we may forgo or delay pursuit of opportunities with other product candidates that later may be proved to have greater commercial potential or a greater likelihood of success.
Because we have limited financial and managerial resources, we focus on research programs and product candidates for specific indications. As a result, we may forgo or delay pursuit of opportunities with other product candidates that later may be proved to have greater commercial potential or a greater likelihood of success.
We have not obtained any valuation of our assets (including goodwill). U.S. Holders of our ADSs or ordinary shares should consult their tax advisors regarding the value and characterization of our assets for purposes of the PFIC rules, which are subject to some uncertainties.
We have not obtained any valuation of our assets (including our goodwill and other intangible assets). U.S. Holders of our ADSs or ordinary shares should consult their tax advisors regarding the value and characterization of our assets for purposes of the PFIC rules, which are subject to some uncertainties.
Even if ADG126, ADG116, ADG206, ADG106 or one of our other proprietary product candidates obtains regulatory approval, we may determine that commercializing such product candidate ourselves would not be the most effective way to create value for our shareholders or holders of ADSs.
Even if ADG126, ADG206 or one of our other proprietary product candidates obtains regulatory approval, we may determine that commercializing such product candidate ourselves would not be the most effective way to create value for our shareholders or holders of ADSs.
On August 16, 2022, President Biden signed into law the Inflation Reduction Act that includesa provision that is intended to lower certain prescription drug costs under Medicare. The law permits the Medicare program to negotiate Medicare payments for a limited number of drugs.
On August 16, 2022, President Biden signed into law the Inflation Reduction Act that includes a provision that is intended to lower certain prescription drug costs under Medicare. The law permits the Medicare program to negotiate Medicare payments for a limited number of drugs.
For details, see page 16 of this annual report; and ● Substantial uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations. For details, see page 19 of this annual report.
For details, see page 16 of this annual report; and ● Substantial uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations. For details, see page 20 of this annual report.
For detailed discussion on material applicable PRC regulation, see “Item 4 Information on the Company—PRC Regulation” Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs.
For detailed discussion on material applicable PRC regulation, see “Item 4 Information on the Company—PRC Regulation.” Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs.
Because our market capitalization has declined substantially in recent years, if the value of our goodwill is determined by reference to the average of our quarterly market capitalization, then it is our belief that we were likely a PFIC for our 2023 taxable year.
Because our market capitalization has declined substantially in recent years, if the value of our goodwill is determined by reference to the average of our quarterly market capitalization, then it is our belief that we were likely a PFIC for our 2024 taxable year.
Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. 10 Table of Contents The enactment of the Accelerating Holding Foreign Companies Accountable Act decreases the number of non-inspection years from three years to two, thus reducing the time period before our ADSs will be prohibited from trading on the Nasdaq Stock Market or OTC or delisted.
Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. 10 Table of Contents The enactment of the Accelerating Holding Foreign Companies Accountable Act decreases the number of non-inspection years from three years to two, thus reducing the time period before our ADSs will be prohibited from trading on the Nasdaq Stock Market or in the over-the-counter market or delisted.
A decline in the value of our company could also cause you to lose all or part of your investment. 27 Table of Contents We may need to obtain substantial additional financing to fund our growth and operations, which may not be available on acceptable terms, if at all. The development of biopharmaceutical product candidates is capital-intensive.
A decline in the value of our company could also cause you to lose all or part of your investment. We may need to obtain substantial additional financing to fund our growth and operations, which may not be available on acceptable terms, if at all. The development of biopharmaceutical product candidates is capital-intensive.
If any of this occurs, our business will be materially harmed. Clinical trials must be conducted in accordance with the FDA and other applicable regulatory authorities’ legal requirements, regulations and guidelines, and are subject to oversight by these governmental agencies and Ethics Committees or IRBs at the medical institutions where the clinical trials are conducted.
If any of this occurs, our business will be materially harmed. 34 Table of Contents Clinical trials must be conducted in accordance with the FDA and other applicable regulatory authorities’ legal requirements, regulations and guidelines, and are subject to oversight by these governmental agencies and Ethics Committees or IRBs at the medical institutions where the clinical trials are conducted.
In addition, the U.K. held a referendum on June 23, 2016 on its membership in the EU, in which voters approved an exit from the EU, commonly referred to as “Brexit’’; the U.K. formally left the EU on January 31, 2020.
In addition, the U.K. held a referendum on June 23, 2016 on its membership in the EU, in which voters approved an exit from the EU, commonly referred to as “Brexit”; the U.K. formally left the EU on January 31, 2020.
Furthermore, our shareholders whose jurisdictions of residence have tax treaties or arrangements with China may not qualify for, or able to obtain in practice, the benefits under these tax treaties or arrangements. The biopharmaceutical industry in China is highly regulated and such regulations are subject to changes which may affect approval and commercialization of our product candidates.
Furthermore, our shareholders whose jurisdictions of residence have tax treaties or arrangements with China may not qualify for, or able to obtain in practice, the benefits under these tax treaties or arrangements. 19 Table of Contents The biopharmaceutical industry in China is highly regulated and such regulations are subject to changes which may affect approval and commercialization of our product candidates.
CROs, as well as expose us to risks associated with clinical investigators who are unknown to the FDA, and different standards of diagnosis, screening and medical care. 34 Table of Contents If we encounter difficulties in enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
CROs, as well as expose us to risks associated with clinical investigators who are unknown to the FDA, and different standards of diagnosis, screening and medical care. If we encounter difficulties in enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
Jurisdictions in addition to the United States have established abbreviated pathways for regulatory approval of biological products that are biosimilar to earlier approved reference products. For example, the European Union has had an established regulatory pathway for biosimilars since 2005. The increased likelihood of biosimilar competition has increased the risk of loss of innovators’ market exclusivity.
Jurisdictions in addition to the United States have established abbreviated pathways for regulatory approval of biological products that are biosimilar to earlier approved reference products. For example, the European Union has had an established regulatory pathway for biosimilars since 2005. 31 Table of Contents The increased likelihood of biosimilar competition has increased the risk of loss of innovators’ market exclusivity.
For details, see page 26 of this annual report; 6 Table of Contents ● We have incurred net losses historically and we may continue to incur net losses in the near future.
For details, see page 27 of this annual report; 6 Table of Contents ● We have incurred net losses historically and we may continue to incur net losses in the near future.
We also face regulatory uncertainties that could restrict our ability to adopt incentive plans for our directors, executive officers and employees under PRC law. 20 Table of Contents We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
We also face regulatory uncertainties that could restrict our ability to adopt incentive plans for our directors, executive officers and employees under PRC law. We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting and concluded that our internal control over financial reporting was effective as of December 31, 2023. For details, see “Item 15.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting and concluded that our internal control over financial reporting was effective as of December 31, 2024. For details, see “Item 15.
U.S. investors that may be treated for purposes of the CFC rules as owning 10% of our stock by voting power or value should consult their tax advisors regarding the potential application of these rules in their particular circumstances. 80 Table of Contents
U.S. investors that may be treated for purposes of the CFC rules as owning 10% of our stock by voting power or value should consult their tax advisors regarding the potential application of these rules in their particular circumstances.
A filing-based regulatory regime is adopted to regulate both direct and indirect overseas securities offering and listing by the domestic companies undert the Trial Measures.
A filing-based regulatory regime is adopted to regulate both direct and indirect overseas securities offering and listing by the domestic companies under the Trial Measures.
Federal Income Tax Consequences—Passive Foreign Investment Company Rules.” If a U.S. person is treated as owning 10% or more of our stock by vote or value, such person may be subject to adverse U.S. federal income tax consequences.
Federal Income Tax Consequences—Passive Foreign Investment Company Rules.” 80 Table of Contents If a U.S. person is treated as owning 10% or more of our stock by vote or value, such person may be subject to adverse U.S. federal income tax consequences.
For details, see page 10 of this annual report; ● The enactment of the Accelerating Holding Foreign Companies Accountable Act decreases the number of non-inspection years from three years to two, thus reducing the time period before our ADSs will be prohibited from trading on the Nasdaq Stock Market or OTC or delisted.
For details, see page 10 of this annual report; ● The enactment of the Accelerating Holding Foreign Companies Accountable Act decreases the number of non-inspection years from three years to two, thus reducing the time period before our ADSs will be prohibited from trading on the Nasdaq Stock Market or in the over-the-counter market or delisted.
We will need to grow our organization, and we may experience difficulties in managing this growth, which could disrupt our operations. As of December 31, 2023, we had 174 full-time employees. As our development and commercialization plans and strategies develop, we expect to expand our employee base for managerial, operational, financial and other resources.
We will need to grow our organization, and we may experience difficulties in managing this growth, which could disrupt our operations. As of December 31, 2024, we had 138 full-time employees. As our development and commercialization plans and strategies develop, we expect to expand our employee base for managerial, operational, financial and other resources.
For instance, our current effective memorandum and articles of association provides that JSR Limited shall have the right to designate, appoint, remove and replace and reappoint one director so long it holds at least five percent of the shares outstanding on a fully-diluted basis and an as-converted basis, although JSR Limited currently does not have representation at our board; as long as Wuxi Pharmatech Healthcare Fund I L.P., which is controlled by the ultimate controlling party of our sole supplier, holds at least five percent of the shares outstanding on a fully-diluted basis, it shall have the right to nominate one independent non-executive director and such one director shall be appointed and agreed by the board; as long as Peter Luo holds or beneficially owns any shares or is employed by us or any of our subsidiaries, he will serve as one of our directors and the Chairman of the Board of Directors; in addition, during the period commencing upon February 2021 and ending on the earlier of (i) the date upon which Peter Luo beneficially owns less than five percent of the shares outstanding on a fully diluted basis, (ii) the death or legal determination of Peter Luo’s incapacity or (iii) the termination of Peter Luo as an executive officer or principal scientific advisor to us or any of our subsidiaries or for cause (as determined under his related employment or consulting arrangements and subject to all related cure provisions), Peter Luo shall have the right to designate, appoint, remove and replace and reappoint one additional director; and as long as General Atlantic Singapore AI Pte.
These investors and our founder, Peter Luo, also have certain rights, such as board representation right and registration right that our other shareholders do not have. 29 Table of Contents For instance, our current effective memorandum and articles of association provides that JSR Limited shall have the right to designate, appoint, remove and replace and reappoint one director so long it holds at least five percent of the shares outstanding on a fully-diluted basis and an as-converted basis, although JSR Limited currently does not have representation at our board; as long as Wuxi Pharmatech Healthcare Fund I L.P., which is controlled by the ultimate controlling party of our sole supplier, holds at least five percent of the shares outstanding on a fully-diluted basis, it shall have the right to nominate one independent non-executive director and such one director shall be appointed and agreed by the board; as long as Peter Luo holds or beneficially owns any shares or is employed by us or any of our subsidiaries, he will serve as one of our directors and the Chairman of the Board of Directors; in addition, during the period commencing upon February 2021 and ending on the earlier of (i) the date upon which Peter Luo beneficially owns less than five percent of the shares outstanding on a fully diluted basis, (ii) the death or legal determination of Peter Luo’s incapacity or (iii) the termination of Peter Luo as an executive officer or principal scientific advisor to us or any of our subsidiaries or for cause (as determined under his related employment or consulting arrangements and subject to all related cure provisions), Peter Luo shall have the right to designate, appoint, remove and replace and reappoint one additional director; and as long as General Atlantic Singapore AI Pte.
We also expect to incur significant costs associated with operating as a public company. ● To date, we have funded our operations primarily through capital contributions from our shareholders via private placements and proceeds from our initial public offering. Our operations have consumed substantial amounts of cash since inception.
We also expect to incur significant costs associated with operating as a public company. ● To date, we have funded our operations primarily through capital contributions from our shareholders via private placements and proceeds from our initial public offering and subsequent at-the-market offering. Our operations have consumed substantial amounts of cash since inception.
In cases where data from clinical trials conducted outside the United States are intended to serve as the sole basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the United States population and United States medical practice; (ii) the trials were performed by clinical investigators of recognized competence and (iii) the data may be considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means.
In cases where data from clinical trials conducted outside the United States are intended to serve as the sole basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data contains details as to whether the studies include or are similar to the United States population and United States medical practice; (ii) the trials were performed by clinical investigators of recognized competence and (iii) the data may be considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means.
Further, clinical trials by their nature utilize a sample of the potential patient population. With a limited number of patients and limited duration of exposure, rare and severe side effects of our product candidates may only be uncovered with a significantly larger number of patients exposed to the product candidate.
Further, clinical trials by their nature utilize a sample of the potential patient population. With a limited number of patients and limited duration of exposure, rare and severe side effects of our product candidates may only be uncovered with a significantly larger number of patients exposed to the product candidate at a later stage of development.
Pursuant to the Announcement of the State Administration of Taxation on Several Issues concerning Enterprise Income Tax on the Indirect Transfers of Property by Non-Resident Enterprises, issued by the SAT in 2015, where a non-resident enterprise indirectly transfers equities and other property of a Chinese resident enterprise to evade its obligation of paying enterprise income tax by implementing arrangements that are not for bona fide commercial purpose, such indirect transfer shall, in accordance with the provisions of Article 47 of the Enterprise Income Tax Law, be re-identified and recognized as a direct transfer of equities and other property of the Chinese resident enterprise.
Pursuant to the Announcement of the State Administration of Taxation on Several Issues concerning Enterprise Income Tax on the Indirect Transfers of Property by Non-Resident Enterprises, issued by the SAT in 2015, where a non-resident enterprise indirectly transfers equities and other property of a Chinese resident enterprise to evade its obligation of paying enterprise income tax by implementing arrangements that are not for bona fide commercial purpose, such indirect transfer shall, in accordance with the provisions of Article 47 of the Enterprise Income Tax Law, be re-identified and recognized as a direct transfer of equities and other property of the Chinese resident enterprise. 21 Table of Contents On February 3, 2015, the SAT issued the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises, or SAT Bulletin 7.
The success of our product candidates, including ADG126, ADG116, ADG206 and ADG106, will depend on several factors, including: ● successful enrollment in, and completion of, preclinical studies and clinical trials; ● receipt of regulatory approvals from the FDA, NMPA and other comparable regulatory authorities for our product candidates; 31 Table of Contents ● establishing commercial manufacturing capabilities, either by building facilities ourselves or making arrangements with third-party manufacturers; ● relying on third parties to conduct our clinical trials safely and efficiently; ● obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity; ● protecting our rights in our intellectual property; ● ensuring we do not infringe, misappropriate or otherwise violate the patent, trade secret or other intellectual property rights of third parties; ● launching commercial sales of our product candidates, if and when approved; ● competition with other product candidates and drugs; and ● continued acceptable safety profile for our product candidates following final regulatory approval, if and when received.
The success of our product candidates, including ADG126, ADG206 and others, will depend on several factors, including: ● successful enrollment in, and completion of, preclinical studies and clinical trials; ● receipt of regulatory approvals from the FDA, NMPA and other comparable regulatory authorities for our product candidates; ● establishing commercial manufacturing capabilities, either by building facilities ourselves or making arrangements with third-party manufacturers that meet the FDA Good Manufacturing Requirements as well as NMPA requirements for manufacturing; ● relying on third parties to conduct our clinical trials safely and efficiently; ● obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity; ● protecting our rights in our intellectual property; ● ensuring we do not infringe, misappropriate or otherwise violate the patent, trade secret or other intellectual property rights of third parties; ● launching commercial sales of our product candidates, if and when approved; ● competition with other product candidates and drugs; and ● continued acceptable safety profile for our product candidates following final regulatory approval, if and when received.
Our product candidates could fail to receive regulatory approval from the FDA, NMPA or a comparable regulatory authority for many reasons, including: ● disagreement with the design or implementation of our clinical trials; ● failure to demonstrate that a product candidate is safe and effective or safe, pure, and potent for its proposed indication; ● failure of clinical trial results to meet the level of statistical significance required for approval; ● failure to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; ● disagreement with our interpretation of data from preclinical trials or clinical trials; ● the insufficiency of data collected from clinical trials of our product candidates to support the submission and filing of a BLA or other submission or to obtain regulatory approval; ● the FDA, NMPA or comparable regulatory authority’s finding of deficiencies related to the manufacturing processes; ● failure of our product candidates to ensure compliance with current Good Manufacturing Practice, or cGMP, following inspections during the regulatory review process or across the production cycle of our product; and ● changes in approval policies, guidances or regulations that render our preclinical and clinical data insufficient for approval.
Our product candidates could fail to receive regulatory approval from the FDA, NMPA or a comparable regulatory authority for many reasons, including: ● disagreement with the design or implementation of our clinical trials; ● failure to demonstrate that a product candidate is safe and effective or safe, pure, and potent for its proposed indication; ● failure of clinical trial results to meet the level of statistical significance required for approval; ● failure to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; ● disagreement with our interpretation of data from preclinical trials or clinical trials; ● the insufficiency of data collected from clinical trials of our product candidates to support the submission and filing of a BLA or other submission or to obtain regulatory approval; ● the FDA, NMPA or comparable regulatory authority’s finding of deficiencies related to the manufacturing processes; ● failure of our product candidates to ensure compliance with current Good Manufacturing Practice, or cGMP, following inspections during the regulatory review process or across the production cycle of our product; and ● changes in approval policies, guidances or regulations that render our preclinical and clinical data insufficient for approval. 37 Table of Contents The FDA and other regulatory authorities have substantial discretion in the approval process, and determining when or whether regulatory approval will be obtained for any of our product candidates.
For example, the PRC State Council promulgated Regulations on the Administration of Human Genetic Resources (effective in July 2019), which require approval from or filings with the Science and Technology Administration Department of the State Council where human genetic resources, or HGR, are involved in any international collaborative project and additional approval for any export or cross-border transfer of the HGR samples or human genetic resource information.
For example, the PRC State Council promulgated Regulations on the Administration of Human Genetic Resources (effective in May 2024), which require approval from or filings with the health department of the State Council where human genetic resources, or HGR, are involved in any international collaborative project and additional approval for any export or cross-border transfer of the HGR samples or human genetic resource information.
Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE or its branches. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.
Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE or its branches.
Our business and the ability to generate revenue related to product sales, if ever, will depend on the successful development, regulatory approval and commercialization of our antibody product candidates for the treatment of patients with cancer, particularly ADG126, ADG116, ADG206 and ADG106, which are still in clinical stage.
Our business and the ability to generate revenue related to product sales, if ever, will depend on the successful development, regulatory approval and commercialization of our antibody product candidates for the treatment of patients with cancer, particularly our lead product candidate ADG126, which is still in clinical stage.
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of our drugs, withdrawal of the product from the market, or voluntary or mandatory product recalls; ● fines, untitled or warning letters, or holds on clinical trials; ● refusal by the FDA, NMPA or comparable regulatory authorities to approve pending applications or supplements to approved applications filed by us or suspension or revocation of license approvals; ● product seizure or detention, or refusal to permit the import or export of our product candidates; and ● injunctions or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of our drugs, withdrawal of the product from the market, or voluntary or mandatory product recalls; ● fines, untitled or warning letters, or holds on clinical trials; ● refusal by the FDA, NMPA or comparable regulatory authorities to approve pending applications or supplements to approved applications filed by us or suspension or revocation of license approvals; ● product seizure or detention, or refusal to permit the import or export of our product candidates; and ● injunctions or the imposition of civil or criminal penalties. 42 Table of Contents The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market.
Controls and Procedures—Remediation of Previously Reported Material Weaknesses in Internal Control over Financial Reporting.” However, we cannot assure you that in the future our management or, if applicable, our independent registered public accounting firm will not identify material weaknesses during the Section 404 of the Sarbanes-Oxley Act audit process.
Controls and Procedures.” However, we cannot assure you that in the future our management or, if applicable, our independent registered public accounting firm will not identify material weaknesses during the Section 404 of the Sarbanes-Oxley Act audit process.
Average review times at the FDA have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
In addition, there are currently political leaders who are recommending a reduction in personnel at the FDA. Average review times at the FDA have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
The Trial Measures provide that an overseas listing or offering securities (which, for the purposes of the Trial Measures, are defined thereunder as equity shares, depository receipts, corporate bonds convertible to equity shares, and other equity securities that are offered and listed overseas, either directly or indirectly, by PRC domestic companies) is explicitly prohibited under any of the following circumstances: (i) such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules of the PRC; (ii) the intended securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) the domestic company, its controlling shareholder(s) or the actual controller have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three years; (iv) the domestic company is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion has yet been made thereof; or (v) there are material ownership disputes over equity held by the domestic company’s controlling shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.
Following issuance of the Draft Overseas Listing Regulations, on February 17, 2023, the CSRC issued the Notice on Filing Arrangements for Overseas Securities Offering and Listing by Domestic Companies (the “CSRC Filing Notice”), stating that the CSRC has published the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and supporting guidelines (the “Listing Guidelines”), collectively the Trial Measures and Listing Guidelines, which came into effect on March 31, 2023. 16 Table of Contents The Trial Measures provide that an overseas listing or offering securities (which, for the purposes of the Trial Measures, are defined thereunder as equity shares, depository receipts, corporate bonds convertible to equity shares, and other equity securities that are offered and listed overseas, either directly or indirectly, by PRC domestic companies) is explicitly prohibited under any of the following circumstances: (i) such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules of the PRC; (ii) the intended securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) the domestic company, its controlling shareholder(s) or the actual controller have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three years; (iv) the domestic company is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion has yet been made thereof; or (v) there are material ownership disputes over equity held by the domestic company’s controlling shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.
Since our inception in 2011, we have focused substantially all of our efforts and financial resources on the discovery and development of antibody therapeutics for the treatment of cancer. We have no products approved for commercial sale and therefore we have not generated any revenue from product sales.
We are a clinical stage biotechnology company with a limited operating history. Since our inception in 2011, we have focused substantially all of our efforts and financial resources on the discovery and development of antibody therapeutics for the treatment of cancer. We have no products approved for commercial sale and therefore we have not generated any revenue from product sales.
Even if we are successful in achieving a final regulatory approval to commercialize a product candidate ahead of our competitors, our product candidates may face competition from biosimilar or other biologic products.
Our product candidates, for which we intend to seek approval as biologic products, may face competition sooner than anticipated. Even if we are successful in achieving a final regulatory approval to commercialize a product candidate ahead of our competitors, our product candidates may face competition from biosimilar or other biologic products.
Any of the foregoing scenarios could materially harm the commercial prospects of our product candidates. 37 Table of Contents Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
Conversely, any failure to enter any collaboration or other strategic transaction that would be beneficial to us could delay the development and potential commercialization of our product candidates and have a negative impact on the competitiveness of any product candidate that reaches the market.
Conversely, any failure to enter any collaboration or other strategic transaction that would be beneficial to us could delay the development and potential commercialization of our product candidates and have a negative impact on the competitiveness of any product candidate that reaches the market. We may not be able to enter into additional collaboration agreements beyond our existing collaborations.
Any failures or setbacks with respect to our proprietary technologies, including adverse effects resulting from the use of product candidates derived from these technologies in human clinical trials and/or the imposition of clinical holds on trials of any product candidates using our proprietary technologies, could have a detrimental impact on our clinical pipeline, as well as our ability to maintain and enter into new corporate collaborations regarding our technologies or otherwise, which would negatively affect our business and financial conditions. 30 Table of Contents Our product candidates, for which we intend to seek approval as biologic products, may face competition sooner than anticipated.
Any failures or setbacks with respect to our proprietary technologies, including adverse effects resulting from the use of product candidates derived from these technologies in human clinical trials and/or the imposition of clinical holds on trials of any product candidates using our proprietary technologies, could have a detrimental impact on our clinical pipeline, as well as our ability to maintain and enter into new corporate collaborations regarding our technologies or otherwise, which would negatively affect our business and financial conditions.
Further, studies of ADG116 in combination with anti-PD-1 therapies have also demonstrated a manageable safety profile. 39 Table of Contents We cannot provide any assurance that there will not be treatment-related severe adverse events with our product candidates, that the trials for our product candidates will not be suspended in the future, or that patient recruitment for trials with our product candidates will not be adversely impacted by the ADG116 related adverse events, any of which could materially and adversely affect our business and prospects.
Further, studies of ADG116 in combination with toripalimab or pembrolizumab (anti-PD-1 antibodies) have also demonstrated a manageable safety profile at 3 mg/kg Q6W, with 43% (3/7) Grade 3 but no Grade 4/5 TRAEs. 39 Table of Contents We cannot provide any assurance that there will not be treatment-related severe adverse events with our product candidates, that the trials for our product candidates will not be suspended in the future, or that patient recruitment for trials with our product candidates will not be adversely impacted by the adverse events, any of which could materially and adversely affect our business and prospects.
We have terminated the authority to grant additional awards under the 2019 Plan and all future awards will be granted under the 2021 Plan. Therefore, the effective maximum number of shares issuable under the 2019 Plan and 2021 Plan is 9,970,732 and 6,936,060, respectively.
We have terminated the authority to grant additional awards under the 2019 Plan and all future awards will be granted under the 2021 Plan. Therefore, the effective maximum number of shares issuable under the 2019 Plan and 2021 Plan is 9,423,435 and 9,707,945, respectively.
A total of 2,994,000 of our ordinary shares was authorized for issuance with respect to awards granted under the 2021 Plan. As of February 29, 2024, the aggregate number of our ordinary shares underlying our outstanding awards under the 2019 Plan was 2,538,070.
A total of 2,994,000 of our ordinary shares was authorized for issuance with respect to awards granted under the 2021 Plan. As of February 28, 2025, the aggregate number of our ordinary shares underlying our outstanding awards under the 2019 Plan was 1,922,960.
SAT Bulletin 7 has introduced a new tax regime that is significantly different from the previous one under SAT Circular 698. SAT Bulletin 7 extends the PRC’s tax jurisdiction to not only Indirect Transfers set forth under SAT Circular 698 but also transactions involving a transfer of other taxable assets through an offshore transfer of a foreign intermediate holding company.
SAT Bulletin 7 extends the PRC’s tax jurisdiction to not only Indirect Transfers set forth under SAT Circular 698 but also transactions involving a transfer of other taxable assets through an offshore transfer of a foreign intermediate holding company.
We may face adverse actions or sanctions by the CSRC or other PRC regulatory agencies if we are unable to comply with such requirements, which may result in fines and penalties, restrictions on our operations, having to delist from a stock exchange outside of China, the halting of securities offerings to foreign investors and other actions that could materially and adversely affect our operations and the interest of our investors and cause a significant depreciation in the price of our ordinary shares and ADSs.
We may face adverse actions or sanctions by the CSRC or other PRC regulatory agencies if we are unable to comply with such requirements, which may result in fines and penalties, restrictions on our operations, having to delist from a stock exchange outside of China, the halting of securities offerings to foreign investors and other actions that could materially and adversely affect our operations and the interest of our investors and cause a significant depreciation in the price of our ordinary shares and ADSs. 18 Table of Contents If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.
We may not be successful in our efforts to use and expand our proprietary platforms to build a pipeline of product candidates. A key element of our strategy is to leverage our technology platform to expand our pipeline of antibody product candidates and in order to do so, we will continue to invest in our platform and development capabilities.
A key element of our strategy is to leverage our technology platform to expand our pipeline of antibody product candidates and in order to do so, we will continue to invest in our platform and development capabilities.
Direct overseas offering and listing by domestic companies refers to such overseas offering and listing by a joint-stock company incorporated domestically, while the indirect overseas offering and listing by domestic companies refers to the offering and listing by a company in the name of an overseas incorporated entity which major business operations are located domestically and such offering and listing is based on the underlying equity, assets, earnings or other similar rights of a domestic company. 16 Table of Contents The Trial Measures stipulate that an overseas listing will be determined as “indirect” if the issuer meets both of the following conditions: (1) 50% or more of any of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year are accounted for by PRC domestic companies (“Condition I”), and (2) the main parts of the issuer’s business activities are conducted in the PRC, or its main places of business are located in the PRC, or the senior managers in charge of its business operations and management are mostly Chinese citizens or domiciled in the PRC (“Condition II”); whether Chinese citizens from Taiwan, Hong Kong, and Macau are included in the foregoing specification is not specified.
The Trial Measures stipulate that an overseas listing will be determined as “indirect” if the issuer meets both of the following conditions: (1) 50% or more of any of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year are accounted for by PRC domestic companies (“Condition I”), and (2) the main parts of the issuer’s business activities are conducted in the PRC, or its main places of business are located in the PRC, or the senior managers in charge of its business operations and management are mostly Chinese citizens or domiciled in the PRC (“Condition II”); whether Chinese citizens from Taiwan, Hong Kong, and Macau are included in the foregoing specification is not specified.
As of December 31, 2023, we had US$109.9 million in cash and cash equivalents. The net cash used in our operating activities was US$43.4 million, US$48.6 million and US$28.5 million for the years ended December 31, 2021, 2022 and 2023, respectively.
As of December 31, 2024, we had US$85.2 million in cash and cash equivalents. The net cash used in our operating activities was US$48.6 million, US$28.5 million and US$29.7 million for the years ended December 31, 2022, 2023 and 2024, respectively.
The FDA, NMPA and other regulatory authorities actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.
Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label. The FDA, NMPA and other regulatory authorities actively enforce the laws and regulations prohibiting the promotion or advertising of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.
The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value.
Our operations in China are governed by the PRC laws and regulations. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value.
All jurisdictions in which we intend to conduct our pharmaceutical-industry activities regulate these activities in great depth and detail. We intend to focus our activities in the major markets such as the United States and China.
All material aspects of the research, development and commercialization of pharmaceutical products are heavily regulated. All jurisdictions in which we intend to conduct our pharmaceutical-industry activities regulate these activities in great depth and detail. We intend to focus our activities in the major markets such as the United States and China.
Meanwhile, the Implementation Regulation of the Foreign Investment Law and the Measures for Reporting of Information on Foreign Investment came into effect as of January 1, 2020, which clarified and elaborated the relevant provisions of the Foreign Investment Law . 19 Table of Contents The Foreign Investment Law sets out the basic regulatory framework for foreign investments and proposes to implement a system of pre-entry national treatment with a negative list for foreign investments, pursuant to which (i) foreign entities and individuals are prohibited from investing in the areas that are not open to foreign investments, (ii) foreign investments in the restricted industries must satisfy certain requirements under the law, and (iii) foreign investments in business sectors outside of the negative list will be treated equally with domestic investments.
The Foreign Investment Law sets out the basic regulatory framework for foreign investments and proposes to implement a system of pre-entry national treatment with a negative list for foreign investments, pursuant to which (i) foreign entities and individuals are prohibited from investing in the areas that are not open to foreign investments, (ii) foreign investments in the restricted industries must satisfy certain requirements under the law, and (iii) foreign investments in business sectors outside of the negative list will be treated equally with domestic investments.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any regulatory approval that we may have obtained and we may not achieve or sustain profitability. 42 Table of Contents All material aspects of the research, development and commercialization of pharmaceutical products are heavily regulated.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any regulatory approval that we may have obtained and we may not achieve or sustain profitability.
We were likely a passive foreign investment company, or PFIC, for 2023, and there is a significant risk that we will be a PFIC for 2024 and possibly subsequent taxable years, in which case U.S. investors will generally be subject to adverse U.S. federal income tax consequences.
We were likely a passive foreign investment company, or PFIC, for 2024, if the value of our goodwill is determined by reference to the average of our quarterly market capitalization, and there is a significant risk that we will be a PFIC for 2025 and possibly subsequent taxable years, in which case U.S. investors will generally be subject to adverse U.S. federal income tax consequences.
Risks Related to Doing Business in the PRC Uncertainties with respect to the PRC legal system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes in policies, laws and regulations in China could adversely affect us. Our operations in China are governed by the PRC laws and regulations.
For details, see page 81 of this annual report. ​ Risks Related to Doing Business in the PRC Uncertainties with respect to the PRC legal system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes in policies, laws and regulations in China could adversely affect us.
Business Overview—Regulation—Other PRC Government Regulations—Regulations on Information Security and Data Protection” for detailed discussion. As of the date of this annual report, the exact scope of CIIOs and important data under the current laws, regulations and regulatory regime remains unclear, and the authorities may have wide discretion in the interpretation and enforcement of the related laws and regulations.
As of the date of this annual report, the exact scope of CIIOs and important data under the current laws, regulations and regulatory regime remains unclear, and the authorities may have wide discretion in the interpretation and enforcement of the related laws and regulations.
Ltd. and its affiliates hold at least five percent of the shares outstanding on a fully-diluted basis, they shall have the right to designate, appoint, remove and replace and reappoint one director.
Ltd. (“GA”) and its affiliates hold at least five percent of the shares outstanding on a fully-diluted basis, they shall have the right to designate, appoint, remove and replace and reappoint one director. In March 2025, GA has delivered a written undertaking to irrevocably waive its board appointment right.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Additionally, addressing the dose-dependent toxicities of anti-CTLA-4 therapy may enable more front-line combinations, fully unlocking the potential of anti-CTLA-4 as a cornerstone of cancer care. Adagene’s innovative view of anti-CTLA-4 therapy focuses on the fundamental biology of CTLA-4 and its constitutive expression on Tregs within the TME.
Additionally, addressing dose-dependent toxicities of anti-CTLA-4 therapy may enable more front-line combinations, fully unlocking the potential of anti-CTLA-4 as a cornerstone of cancer care. Adagene’s innovative view of anti-CTLA-4 therapy focuses on the fundamental biology of CTLA-4 and its constitutive expression on Tregs within the TME.
Research shown below demonstrates that CTLA-4 is highly expressed within the Tregs in the tumor both in mice and humans across tumor types, with up to five times higher of CTLA-4 on the Tregs in the tumor versus CTLA-4 expression on CD4+ T effector and CD8+ T cells in the tumor.
Research shown below demonstrates that CTLA-4 is highly expressed within Tregs cells in the tumor both in mice and humans across tumor types, with up to five times higher of CTLA-4 on the Tregs in the tumor versus CTLA-4 expression on CD4+ T effector and CD8+ T cells in the tumor.
See “—Summary of Combination Clinical Studies & Results. ” In totality, our clinical data support best-in-class safety and differentiated efficacy profiles for ADG126 particularly in combination with anti-PD-1, overcoming the safety challenges of anti-CTLA-4 therapy to become a cornerstone of cancer care by its T cell priming and strong Treg depletion in the TME.
See “—Summary of Combination Clinical Studies & Results. ” and “ —Summary of Monotherapy Clinical Studies & Results .” In totality, our clinical data support best-in-class safety and differentiated efficacy profiles for ADG126 particularly in combination with anti-PD-1, overcoming the safety challenges of anti-CTLA-4 therapy to become a cornerstone of cancer care by its T cell priming and strong Treg depletion in the TME.
The determination as to whether or not an overseas offering and listing by PRC domestic companies is indirect shall be made on a “substance over form” basis; the Listing Guidelines further stipulate that if an issuer not satisfying Condition I submits an application for issuance and listing in overseas markets in accordance with relevant non-PRC issuance regulations requiring such issuer to disclose risk factors mainly related to the PRC, the securities firm(s) and the issuer’s PRC counsel should follow the principle of “substance over form” in order to identify and argue whether the issuer should complete a filing under the Trial Measures. 141 Table of Contents Subsequent securities offerings of an issuer in (i) the same overseas market where it has previously offered and listed securities, and (ii) an overseas market other than one where the issuer has previously offered and listed securities shall be filed with the CSRC within three working days after offerings are completed.
The determination as to whether or not an overseas offering and listing by PRC domestic companies is indirect shall be made on a “substance over form” basis; the Listing Guidelines further stipulate that if an issuer not satisfying Condition I submits an application for issuance and listing in overseas markets in accordance with relevant non-PRC issuance regulations requiring such issuer to disclose risk factors mainly related to the PRC, the securities firm(s) and the issuer’s PRC counsel should follow the principle of “substance over form” in order to identify and argue whether the issuer should complete a filing under the Trial Measures. 149 Table of Contents Subsequent securities offerings of an issuer in (i) the same overseas market where it has previously offered and listed securities, and (ii) an overseas market other than one where the issuer has previously offered and listed securities shall be filed with the CSRC within three working days after offerings are completed.
According to the Notice on Promoting the Implementation of Corporate Income Tax Policies for Advanced Technology Service Enterprises Nationwide, or the Notice, since January 2017, an enterprise which is recognized as an “Advanced Technology Service Enterprises” under the Notice enjoys a reduced enterprise income tax rate of 15%. 144 Table of Contents According to the Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income, or the Double Tax Avoidance Arrangement, which was promulgated and came into effect in August 2006, and other applicable PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions and requirements under such Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%.
According to the Notice on Promoting the Implementation of Corporate Income Tax Policies for Advanced Technology Service Enterprises Nationwide, or the Notice, since January 2017, an enterprise which is recognized as an “Advanced Technology Service Enterprises” under the Notice enjoys a reduced enterprise income tax rate of 15%. 152 Table of Contents According to the Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income, or the Double Tax Avoidance Arrangement, which was promulgated and came into effect in August 2006, and other applicable PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions and requirements under such Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%.
Clinical Development Status Our clinical development of ADG126 is focused on combination evaluation with anti-PD-1 therapy, including an ongoing phase 1b/2 trial of ADG126 in combination with pembrolizumab dose expansion cohorts in patients with cohorts in advanced/metastatic MSS CRC evaluating doses of 10 mg/kg Q3W and evaluating 20 mg/kg loading doses.
Clinical Development Status Our clinical development of ADG126 is focused on combination evaluation with anti-PD-1 therapy, including an ongoing phase 1b/2 trial of ADG126 in combination with pembrolizumab dose expansion cohorts in patients of advanced/metastatic MSS CRC evaluating doses of 10 mg/kg Q3W and 20 mg/kg loading doses, etc.
In addition to the upfront payment of US$11.0 million received in 2021, in the aggregate, we could be eligible to receive up to US$55,000,000 in development milestone payments, among which we have received US$3.0 million in 2022 and US$3.0 million in 2023, US$200,000,000 in regulatory milestone payments, and up to US$525,000,000 in sales milestone payments for both targets under the Exelixis Agreement.
In addition to the upfront payment of US$11.0 million received in 2021, in the aggregate, we could be eligible to receive up to US$55.0 million in development milestone payments, among which we have received US$3.0 million in 2022 and US$3.0 million in 2023, US$200 million in regulatory milestone payments, and up to US$525 million in sales milestone payments for both targets under the Exelixis Agreement.
The figure below shows how ADG206 and ADG106 are designed to target a unique epitope of CD137 and overcome the challenges of anti-CD137 therapy. 103 Table of Contents ADG 106/206 target a unique epitope of CD137/4-1BB pathway validated by CAR-T ADG206 POWERbody: Our Fc-Enhanced IgG1 SAFEbody is a Next Generation Anti-CD137 Therapy ADG206 is designed to solve the safety and efficacy challenges of anti-CD137 therapy, leveraging learnings from development of urelumab (another company’s anti-CD137 targeting antibody), which showed single agent clinical efficacy and dose-dependent liver toxicity in clinic, as well as the clinical development of our unmasked anti-CD137, ADG106, which is the activated form.
The figure below shows how ADG206 and ADG106 are designed to target a unique epitope of CD137 and overcome the challenges of anti-CD137 therapy. 111 Table of Contents ADG 106/206 target a unique epitope of CD137/4-1BB pathway validated by CAR-T ADG206 POWERbody: Our Fc-Enhanced IgG1 SAFEbody is a Next Generation Anti-CD137 Therapy ADG206 is designed to solve the safety and efficacy challenges of anti-CD137 therapy, leveraging learnings from development of urelumab (another company’s anti-CD137 targeting antibody), which showed single agent clinical efficacy and dose-dependent liver toxicity in clinic, as well as the clinical development of our unmasked anti-CD137, ADG106, which is the activated form.
We, along with third-party contractors, will be required to navigate the various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates.
We, along with third-party contractors, will be required to navigate the various preclinical, clinical and commercial approval requirements and updates of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates.
Further, we have out-licensed the Greater China rights of ADG104, an anti-PD-L1 mAb currently in Phase 2 clinical development, to Sanjin, and the Greater China rights of ADG125, a novel anti-CSF-1R mAb in Phase 1 development, to Dragon Boat Biopharmaceuticals.
Further, we have out-licensed the Greater China rights of ADG104, an anti-PD-L1 mAb currently in Phase 2 clinical development, to Sanjin, and the Greater China rights of ADG125, a novel anti-CSF-1R mAb in Phase 2 development, to Dragon Boat Biopharmaceuticals.
For example, we believe our clinical stage anti-CTLA-4 and anti-CD137 candidates bind to different epitopes and exhibit dramatic differences in their respective clinical safety and efficacy results, underscoring the importance of finding suitable species cross-reactive antibodies like those we have utilized for comprehensive preclinical evaluation before entering clinical trials. 107 Table of Contents Our DPL is a large physical phage library (~10 12 ) that contain our synthetic designer antibodies with flexible antibody binding interface.
For example, we believe our clinical stage anti-CTLA-4 and anti-CD137 candidates bind to different epitopes and exhibit dramatic differences in their respective clinical safety and efficacy results, underscoring the importance of finding suitable species cross-reactive antibodies like those we have utilized for comprehensive preclinical evaluation before entering clinical trials. 115 Table of Contents Our DPL is a large physical phage library (~10 12 ) that contain our synthetic designer antibodies with flexible antibody binding interface.
These results are shown in the swimmer and spider plots below. 95 Table of Contents Clinical Efficacy of Patients with MSS CRC (Free of Liver Mets) in Dose Expansion Of particular interest was the confirmed PR in a patient who presented initially without active liver metastases but later experienced tumor shrinkage in new liver lesions, suggesting the potency of the ADG126 and pembrolizumab combination once the cleaved ADG126 in steady state in TME is achieved with repeat cycles of therapy.
These results are shown in the Swimmer and Spider plots below. 97 Table of Contents Clinical Efficacy of Patients with MSS CRC (Free of Liver Mets) in Dose Expansion Of particular interest was the confirmed PR in a patient who presented initially without active liver metastases but later experienced tumor shrinkage in new liver lesions, suggesting the potency of the ADG126 and pembrolizumab combination once the steady state cleaved ADG126 in the TME is achieved with repeat cycles of therapy.
We will retain global development and commercialization rights to ADG126. ● In August 2022 and October 2021, we announced agreements with research organizations in Singapore for an investigator-initiated trials of our ADG106 clinical candidate with neoadjuvant chemotherapy (doxorubicin and cyclophosphamide followed by paclitaxel) in early-stage, HER2 negative breast cancer and in combination with anti-PD-1 therapy in patients with advanced non-small cell lung cancer (NSCLC), respectively.
We will retain global development and commercialization rights to ADG126. ● In August 2022 and October 2021, we announced agreements with research organizations in Singapore for an investigator-initiated trials of our ADG106 clinical candidate with neoadjuvant chemotherapy (doxorubicin and cyclophosphamide followed by paclitaxel) in early-stage, HER2 negative breast cancer (ADG106-T6002) and in combination with anti-PD-1 therapy in patients with advanced non-small cell lung cancer (NSCLC)(ADG106-T6001), respectively.
Our lead candidate is an anti-CTLA-4 SAFEbody, ADG126 (muzastotug), which is currently in phase 1b/2 development, initially focused on metastatic microsatellite-stable (MSS) colorectal cancer (CRC).
Our lead candidate is an anti-CTLA-4 SAFEbody, ADG126 (muzastotug), which is currently in phase 1b/2 development, and focused initially on metastatic microsatellite-stable (MSS) colorectal cancer (CRC).
ADG106 NEObody: A Novel Agonistic Anti-CD137 ADG106, is a fully human ligand-blocking, agonistic anti-CD137 IgG4 mAb generated using our NEObody technology to target a unique conserved epitope of CD137. 104 Table of Contents We previously completed two Phase 1 clinical trials, ADG106-1001 and ADG106-1002, in the U.S. and China, respectively, evaluating ADG106 as monotherapy in a total of 98 patients with advanced or metastatic solid tumors and/or NHL.
ADG106 NEObody: A Novel Agonistic Anti-CD137 ADG106, is a fully human ligand-blocking, agonistic anti-CD137 IgG4 mAb generated using our NEObody technology to target a unique conserved epitope of CD137. 112 Table of Contents We previously completed two Phase 1 clinical trials, ADG106-1001 and ADG106-1002, in the U.S. and China, respectively, evaluating ADG106 as monotherapy in a total of 98 patients with advanced or metastatic solid tumors and/or NHL.
Royalties, if any, will be payable on a country-by-country and product-by-product basis until the latest of (i) the tenth anniversary of the first commercial sale of such product in such country, (ii) the expiration of the last-to-expire of certain specified patents that cover such product’s composition of matter or method of use as sold in such country or (iii) the expiration of regulatory exclusivity for such product in such country. 109 Table of Contents The Sanofi Agreement will expire upon the termination of all royalty obligations.
Royalties, if any, will be payable on a country-by-country and product-by-product basis until the latest of (i) the tenth anniversary of the first commercial sale of such product in such country, (ii) the expiration of the last-to-expire of certain specified patents that cover such product’s composition of matter or method of use as sold in such country or (iii) the expiration of regulatory exclusivity for such product in such country. 117 Table of Contents The Sanofi Agreement will expire upon the termination of all royalty obligations.
Under terms of the agreement, Merck provides pembrolizumab and input on our clinical trials evaluating pembrolizumab in combination with ADG126 and ADG116, respectively. 108 Table of Contents TECHNOLOGY COLLABORATIONS WITH BIOPHARMACEUTICAL COMPANIES We enter into collaborations with biotechnology and pharmaceutical companies to leverage the power of our technology platforms, creating a network of potential future revenue streams that complements future long-term value from our wholly-owned pipeline.
Under terms of the agreement, Merck provides pembrolizumab and input on our clinical trials evaluating pembrolizumab in combination with ADG126 and ADG116, respectively. 116 Table of Contents TECHNOLOGY COLLABORATIONS WITH BIOPHARMACEUTICAL COMPANIES We enter into collaborations with biotechnology and pharmaceutical companies to leverage the power of our technology platforms, creating a network of potential future revenue streams that complements future long-term value from our wholly-owned pipeline.
It is currently under Phase 1b/2 clinical evaluation in multiple trials in the U.S., China and APAC, both as monotherapy and in combination with anti-PD-1 therapy. ADG126 is designed to address the toxicity issues of the approved CTLA-4 immuno-oncology therapy and achieve enhance anti-tumor efficacy to expand the potential of CTLA-4 as a target for the treatment of cancer.
It is currently under Phase 1b/2 clinical evaluation in multiple trials in the U.S., China and APAC, in combination with anti-PD-1 therapy. ADG126 is designed to address the toxicity issues of the approved CTLA-4 immuno-oncology therapy and achieve enhance anti-tumor efficacy to expand the potential of CTLA-4 as a target for the treatment of cancer.
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. 117 Table of Contents MATERIAL LICENSES AND APPROVALS The following table sets forth a list of material licenses and approvals, subject to further renewal, that our PRC subsidiary is required to obtain to carry out our operations in China.
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. MATERIAL LICENSES AND APPROVALS The following table sets forth a list of material licenses and approvals, subject to further renewal, that our PRC subsidiary is required to obtain to carry out our operations in China.
Risk Factors—Risks Related to Doing Business in the PRC,” “—Risks Related to Clinical Development of Our Product Candidates,” and “—Risks Related to Obtaining Regulatory Approval of Our Drug Candidates.” Furthermore, in connection with our historical issuance of securities to foreign investors, under currently effective PRC laws, regulations and regulatory rules, as of the date of this annual report, we are not currently required to obtain permissions from the China Securities Regulatory Commission (the “CSRC”), and we have not received any formal notice from any PRC authority indicating that we should apply for or are otherwise subject to cybersecurity review or security assessment.
Risk Factors—Risks Related to Doing Business in the PRC,” “—Risks Related to Clinical Development of Our Product Candidates,” and “—Risks Related to Obtaining Regulatory Approval of Our Drug Candidates.” 84 Table of Contents Furthermore, in connection with our historical issuance of securities to foreign investors, under currently effective PRC laws, regulations and regulatory rules, as of the date of this annual report, we are not currently required to obtain permissions from the China Securities Regulatory Commission (the “CSRC”), and we have not received any formal notice from any PRC authority indicating that we should apply for or are otherwise subject to cybersecurity review or security assessment.
The Provisions on the Administration of Foreign Exchange in Foreign Direct Investments by Foreign Investors, which were promulgated by the SAFE in May 2013 and amended in October 2018 and December 2019, regulate and clarify the administration over foreign exchange administration in foreign direct investments. 142 Table of Contents SAFE promulgated the Notice by the SAFE of Further Deepening Reform and Promoting Cross-border Trade and Investment Facilitation, or Circular 28 in 2023, effective on December 4, 2023.
The Provisions on the Administration of Foreign Exchange in Foreign Direct Investments by Foreign Investors, which were promulgated by the SAFE in May 2013 and amended in October 2018 and December 2019, regulate and clarify the administration over foreign exchange administration in foreign direct investments. 150 Table of Contents SAFE promulgated the Notice by the SAFE of Further Deepening Reform and Promoting Cross-border Trade and Investment Facilitation, or Circular 28 in 2023, effective on December 4, 2023.
According to the Measures for the Exemption of Value-Added Tax from Cross-Border Taxable Activities in the Collection of Value-Added Tax in Lieu of Business Tax (for Trial Implementation) revised in June 2018, if domestic enterprises provide cross-border taxable activities such as professional technical services, technology transfer, software services, the above-mentioned cross-border taxable activities are exempt from VAT. 145 Table of Contents 4.C.
According to the Measures for the Exemption of Value-Added Tax from Cross-Border Taxable Activities in the Collection of Value-Added Tax in Lieu of Business Tax (for Trial Implementation) revised in June 2018, if domestic enterprises provide cross-border taxable activities such as professional technical services, technology transfer, software services, the above-mentioned cross-border taxable activities are exempt from VAT. 153 Table of Contents 4.C.
Upon termination of the Exelixis Agreement for any reason, the license granted to Exelixis will terminate. 110 Table of Contents Sanjin Collaboration/ Out-Licensing Agreements 2018 Collaboration Agreements In December 2018, we entered into (i) a collaboration agreement (the “Sanjin Greater China Agreement”) that covers Greater China with Guilin Sanjin Pharmaceutical Co., Ltd.
Upon termination of the Exelixis Agreement for any reason, the license granted to Exelixis will terminate. 118 Table of Contents Sanjin Collaboration/ Out-Licensing Agreements 2018 Collaboration Agreements In December 2018, we entered into (i) a collaboration agreement (the “Sanjin Greater China Agreement”) that covers Greater China with Guilin Sanjin Pharmaceutical Co., Ltd.
The Negative List covers 12 industries, and any field not falling under the Negative List shall be administered under the principle of equal treatment to domestic and foreign investment. Foreign Investment Law of the PRC, or the Foreign Investment Law, was promulgated by the National People’s Congress, or the NPC in March 2019 and came into effect in January 2020.
The Negative List covers 11 industries, and any field not falling under the Negative List shall be administered under the principle of equal treatment to domestic and foreign investment. Foreign Investment Law of the PRC, or the Foreign Investment Law, was promulgated by the National People’s Congress, or the NPC in March 2019 and came into effect in January 2020.
For the avoidance of doubt, as of the date of this annual report, the CD28 T-cell engagers have not entered into IND-enabling stage. ​ 106 Table of Contents OUR PLATFORM Overview Our proprietary DPL platform is built upon our insights into precise and dynamic antibody-antigen interaction.
For the avoidance of doubt, as of the date of this annual report, the CD28 T-cell engagers have not entered into IND-enabling stage. ​ 114 Table of Contents OUR PLATFORM Overview Our proprietary DPL platform is built upon our insights into precise and dynamic antibody-antigen interaction.
The primary responsibilities of the NMPA include: ● monitoring and supervising the administration of pharmaceutical products, medical appliances and equipment as well as cosmetics in the PRC; ● formulating administrative rules and policies concerning the supervision and administration of pharmaceutical, medical devices, and cosmetics industry; ● evaluating, registering and approving new drugs, generic drugs, imported drugs and traditional Chinese medicine; ● approving and issuing permits for the manufacture and export/import of pharmaceutical products, medical appliances and equipment; 128 Table of Contents ● approving the establishment of enterprises to be engaged in the manufacture and distribution of pharmaceutical products; ● examining and evaluating the safety of pharmaceutical products, medical devices, and cosmetics; and ● managing significant accidents involving pharmaceutical products, medical devices and cosmetics.
The primary responsibilities of the NMPA include: ● monitoring and supervising the administration of pharmaceutical products, medical appliances and equipment as well as cosmetics in the PRC; ● formulating administrative rules and policies concerning the supervision and administration of pharmaceutical, medical devices, and cosmetics industry; ● evaluating, registering and approving new drugs, generic drugs, imported drugs and traditional Chinese medicine; ● approving and issuing permits for the manufacture and export/import of pharmaceutical products, medical appliances and equipment; ● approving the establishment of enterprises to be engaged in the manufacture and distribution of pharmaceutical products; ● examining and evaluating the safety of pharmaceutical products, medical devices, and cosmetics; and ● managing significant accidents involving pharmaceutical products, medical devices and cosmetics.
Other than the above disclosed transfer of funds, we did not transfer any type of assets between Adagene Suzhou and other Adagene subsidiaries in 2021, 2022 and 2023. 85 Table of Contents Restrictions on Foreign Exchange and the Ability to Transfer Cash between Entities, Across Borders and to U.S.
Other than the above disclosed transfer of funds, we did not transfer any type of assets between Adagene Suzhou and other Adagene subsidiaries in 2022, 2023 and 2024. 85 Table of Contents Restrictions on Foreign Exchange and the Ability to Transfer Cash between Entities, Across Borders and to U.S.
ADG126 10 mpk Q3W + Pembro 3L MSS CRC Patient: Case Study of Confirmed PR and Reduced Liver Lesions We also presented a preliminary analysis of progression-free survival (PFS) in those MSS CRC patients free of liver and peritoneal metastasis; a median PFS of seven months was observed in those treated with ADG126 10 mg/kg at two dosing frequencies pooled together [every three weeks (n=9) and every six weeks (n=6)].
ADG126 10 mpk Q3W + Pembro 3L MSS CRC Patient: Case Study of Confirmed PR and Reduced Liver Lesions 98 Table of Contents We also presented a preliminary analysis of progression-free survival (PFS) in those MSS CRC patients free of liver and peritoneal metastasis; a median PFS of seven months was observed in those treated with ADG126 10 mg/kg at two dosing frequencies pooled together every three weeks (n=9) and every six weeks (n=6).
Taken together, these preclinical studies (summarized below) have demonstrated that ADG116 has at least a five-fold greater potency profile than ipilimumab, a commercially-available anti-CTLA-4 therapy, and superior activity in various tumor specific models, while its safety profile is at least three-fold better based on GLP monkey data. 101 Table of Contents ADG116 is designed to target a unique conserved epitope of CTLA-4.
Taken together, these preclinical studies (summarized below) have demonstrated that ADG116 has at least a five-fold greater potency profile than ipilimumab, a commercially-available anti-CTLA-4 therapy, and superior activity in various tumor specific models, while its safety profile is at least three-fold better based on GLP monkey data. ADG116 is designed to target a unique conserved epitope of CTLA-4.
On December 15, 2022, the PCAOB announced that it was able, in 2022, to inspect and investigate completely issuer audit engagements of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong and that it had vacated its 2021 Determinaitons accordingly.
On December 15, 2022, the PCAOB announced that it was able, in 2022, to inspect and investigate completely issuer audit engagements of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong and that it had vacated its 2021 Determinations accordingly.
It applies our proprietary SAFEbody technology to a parental antibody, ADG116, enabling ADG126 to be activated primarily in tumor tissues rather than healthy tissues, minimizing the risk of on-target, off-tumor toxicities. 91 Table of Contents In September 2022, we presented the first clinical results from our monotherapy evaluation in a poster presentation at the European Society of Medical Oncology (ESMO) annual congress.
It applies our proprietary SAFEbody technology to a parental antibody, ADG116, enabling ADG126 to be activated primarily in tumor tissues rather than healthy tissues, minimizing the risk of on-target, off-tumor toxicities. In September 2022, we presented the first clinical results from our monotherapy evaluation in a poster presentation at the European Society of Medical Oncology (ESMO) annual congress.
We expect to continue our relationships with WuXi Biologics while Adagene is continuously evaluating multiple global vendors to ensure continuous supply of Adagene pipeline products for on-going and planned clinical trials. COMPETITION The biotechnology and pharmaceutical industries are highly competitive and characterized by continuing technological advancement, significant competition and an emphasis on intellectual property.
We expect to continue our relationships with WuXi Biologics while Adagene is continuously evaluating multiple global vendors to ensure continuous supply of Adagene pipeline products for on-going and planned clinical trials. 124 Table of Contents COMPETITION The biotechnology and pharmaceutical industries are highly competitive and characterized by continuing technological advancement, significant competition and an emphasis on intellectual property.
See “Item 3 Key Information—3.D.Risk Factors—Risks Related to Doing Business in the PRC—Failure to comply with existing or future laws and regulations related to privacy or data security could lead to government enforcement actions, which could include civil or criminal fines or penalties, investigation or sanction by regulatory authorities, private litigation, other liabilities, and/or adverse publicity.” 84 Table of Contents Material Licenses and Approvals Our PRC subsidiary has obtained all material licenses and approvals required for our operations in China.
See “Item 3 Key Information—3.D.Risk Factors—Risks Related to Doing Business in the PRC—Failure to comply with existing or future laws and regulations related to privacy or data security could lead to government enforcement actions, which could include civil or criminal fines or penalties, investigation or sanction by regulatory authorities, private litigation, other liabilities, and/or adverse publicity.” Material Licenses and Approvals Our PRC subsidiary has obtained all material licenses and approvals required for our operations in China.
Other anti-CD137 monoclonal antibody candidates in earlier stages of development include YH004 from Eucure, EU101 from Eutilex, ATOR-1017 from Alligator Bioscience, LVGN6051 from Lyvgen, CTX-471 from Compass Therapeutics, and AGEN2373 from Agenus. INSURANCE We provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance and medical insurance for our employees.
Other anti-CD137 monoclonal antibody candidates in earlier stages of development include YH004 from Eucure, EU101 from Eutilex, ATOR-1017 from Alligator Bioscience, LVGN6051 from Lyvgen, CTX-471 from Compass Therapeutics, and AGEN2373 from Agenus. 125 Table of Contents INSURANCE We provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance and medical insurance for our employees.
Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. 120 Table of Contents After the FDA evaluates a BLA and conducts inspections of manufacturing facilities where the commercial product and/or its drug substance will be produced, the FDA may issue an approval letter or a Complete Response letter.
Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. After the FDA evaluates a BLA and conducts inspections of manufacturing facilities where the commercial product and/or its drug substance will be produced, the FDA may issue an approval letter or a Complete Response letter.
ADG116 was observed in this study to exhibit stronger antitumor activity than ipilimumab (ADG116 at 0.2 mg/kg induced equivalent antitumor response as 1 mg/kg of ipilimumab). 102 Table of Contents Preclinical Toxicology: We performed preclinical toxicology studies in cynomolgus monkeys and rats to evaluate the toxicity of ADG116. There were no abnormal findings in the single-dose toxicology studies.
ADG116 was observed in this study to exhibit stronger antitumor activity than ipilimumab (ADG116 at 0.2 mg/kg induced equivalent antitumor response as 1 mg/kg of ipilimumab). Preclinical Toxicology: We performed preclinical toxicology studies in cynomolgus monkeys and rats to evaluate the toxicity of ADG116. There were no abnormal findings in the single-dose toxicology studies.
In January 2023, we announced interim findings from these trials showing the combination safety profile and confirmed clinical responses with ADG126 up to 10 mg/kg with repeat cycles in combination with anti-PD-1 from the dose escalation portion of our ongoing phase 1b/2 studies.
In January 2023, we announced interim findings from the dose escalation portion of our ongoing phase 1b/2 studies showing the combination safety profile and confirmed clinical responses with ADG126 at up to 10 mg/kg with repeat cycles in combination with anti-PD-1.
For investigational products developed for oncology indications, the Phase I trials are normally conducted in patients with serious or life-threatening diseases without other treatment alternatives. 119 Table of Contents ● Phase II—The investigational product is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks.
For investigational products developed for oncology indications, the Phase I trials are normally conducted in patients with serious or life-threatening diseases without other treatment alternatives. ● Phase II—The investigational product is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks.
The SEC maintains an internet site at www.sec.gov that contains reports, information statements, and other information regarding issuers that file electronically with the SEC. Recent Regulatory Development Implication of the Holding Foreign Companies Accountable Act The Holding Foreign Companies Accountable Act (the “HFCAA”), was enacted on December 18, 2020.
The SEC maintains an internet site at www.sec.gov that contains reports, information statements, and other information regarding issuers that file electronically with the SEC. 81 Table of Contents Recent Regulatory Development Implication of the Holding Foreign Companies Accountable Act The Holding Foreign Companies Accountable Act (the “HFCAA”), was enacted on December 18, 2020.
Multiplex immunofluorescence analysis was performed by Dr. Joe Yeong’s lab at IMCB, A*STAR. Images were analyzed using HALO. Tregs were defined as Foxp3+ CD8- cells. Teff cells were defined as CD8+ T cells.
Multiplex immunofluorescence analysis was performed by Dr. Joe Yeong’s lab at IMCB, A*STAR. Images were analyzed using HALO. Tregs were defined as Foxp3+ CD8- cells.
Risk Factors–– The enactment of the Accelerating Holding Foreign Companies Accountable Act decreases the number of non-inspection years from three years to two, thus reducing the time period before our ADSs may be prohibited from trading on the Nasdaq Stock Market or in the over-the-counter market or delisted.” 81 Table of Contents On December 16, 2021, PCAOB issued the HFCAA Determination Report, according to which our auditor was subject to the determinations that the PCAOB is unable to inspect or investigate completely (the “2021 Determinaitons”).
Risk Factors––The enactment of the Accelerating Holding Foreign Companies Accountable Act decreases the number of non-inspection years from three years to two, thus reducing the time period before our ADSs may be prohibited from trading on the Nasdaq Stock Market or in the over-the-counter market or delisted.” On December 16, 2021, PCAOB issued the HFCAA Determination Report, according to which our auditor was subject to the determinations that the PCAOB is unable to inspect or investigate completely (the “2021 Determinations”).
If FDA determines the application is filable, the FDA’s goal is to review standard applications within ten months after it accepts the application for filing, or, if the application qualifies for priority review, six months after the FDA accepts the application for filing.
If FDA determines the application is fillable, the FDA’s goal is to review standard applications within ten months after it accepts the application for filing, or, if the application qualifies for priority review, six months after the FDA accepts the application for filing.
Both confirmed PRs were sustained after more than 55 weeks (over 14 cycles) of treatment, as of the ASCO GI data cut off. 94 Table of Contents We believe the robust safety profile of our masked anti-CTLA-4 SAFEbody ADG126 enables continuous dosing in combination with anti-PD-1 to drive the efficacy in patients with cold tumors such as MSS CRC, and in patients with PD-L1 low expressing or PD-1 resistant warm tumors.
Both confirmed PRs were sustained after more than 55 weeks (over 14 cycles) of treatment, as of the ASCO GI data cut off. 96 Table of Contents We believe the well-tolerated safety profile of our masked anti-CTLA-4 SAFEbody Ò ADG126 enables continuous dosing in combination with anti-PD-1 to drive the efficacy in patients with cold tumors such as MSS CRC, and in patients with PD-L1 low expressing or PD-1 resistant warm tumors.
Detailed implementation rules for drug classification and requirements for corresponding application materials will be promulgated by the NMPA. 129 Table of Contents In March 2016, the CFDA issued the Reform Plan for Registration Category of Chemical Medicine, which outlined the reclassifications of drug applications under the Registration Measures.
Detailed implementation rules for drug classification and requirements for corresponding application materials will be promulgated by the NMPA. In March 2016, the CFDA issued the Reform Plan for Registration Category of Chemical Medicine, which outlined the reclassifications of drug applications under the Registration Measures.
On February 9, 2021, the ADSs began trading on the Nasdaq under the symbol “ADAG.” Our corporate headquarters is located at 4F, Building C14, No. 218, Xinghu Street, Suzhou Industrial Park Suzhou, Jiangsu Province, 215123, People’s Republic of China. Our San Diego office address is 6042 Cornerstone Court West Suite E, San Diego, CA 92121.
On February 9, 2021, the ADSs began trading on the Nasdaq under the symbol “ADAG.” Our corporate headquarters is located at 4F, Building C14, No. 218, Xinghu Street, Suzhou Industrial Park Suzhou, Jiangsu Province, 215123, People’s Republic of China. Our San Diego office address is 6048 Cornerstone Court West Suite C, San Diego, CA 92121.
ADG126/ADG116 is designed to target CTLA-4 a unique and conserved epitope with species cross-reactivity for translational fidelity. ​ 97 Table of Contents Moreover, ADG126 has been observed in preclinical animal studies to mediate effector functions to eliminate highly upregulated CTLA-4 expressing cells, particularly regulatory T-cells in the TME, primarily through its strong ADCC.
ADG126/ADG116 is designed to target CTLA-4 a unique and conserved epitope with species cross-reactivity for translational fidelity. ​ Moreover, ADG126 has been observed in preclinical animal studies to mediate effector functions to eliminate highly upregulated CTLA-4 expressing cells, particularly regulatory T-cells in the TME, primarily through its strong ADCC.
A filing-based regulatory regime is adopted to regulate both direct and indirect overseas securities offering and listing by the domestic companies undert the Trial Measures.
A filing-based regulatory regime is adopted to regulate both direct and indirect overseas securities offering and listing by the domestic companies under the Trial Measures.
Currently, the Cybersecurity Review Measures and the Draft Data Security Regulations have not materially affected our business and operations, but in anticipation of the strengthened implementation of cybersecurity laws and regulations and the continued expansion of our business, we face potential risks if we are deemed as a critical information infrastructure operator, a network platform operator or data processing operator under the PRC cybersecurity laws and regulations.
Currently, the Cybersecurity Review Measures and the Regulation on Network Data Security Management have not materially affected our business and operations, but in anticipation of the strengthened implementation of cybersecurity laws and regulations and the continued expansion of our business, we face potential risks if we are deemed as a critical information infrastructure operator, a network platform operator or data processing operator under the PRC cybersecurity laws and regulations.
There were no intercompany loans provided by Adagene Inc. to Adagene Suzhou during the years ended and as of December 31, 2021, 2022 and 2023.
There were no intercompany loans provided by Adagene Inc. to Adagene Suzhou during the years ended and as of December 31, 2022, 2023 and 2024.
At the active, potent dose of 10 mg/kg Q3W, we observed two confirmed PRs in 12 evaluable patients resulting in a 17% overall response rate, or a 22% response rate in the subset of nine of these patients without peritoneal or liver metastases.
At the active, potent dose of 10 mg/kg Q3W, we observed two confirmed PRs in 12 evaluable patients resulting in a 17% overall response rate (ORR), or a 22% response rate in the subset of nine patients without peritoneal and liver metastases.
It also targets regulatory T-cells for depletion within the TME by means of ADCC, to mediate antitumor T-cell immunity. 98 Table of Contents We evaluated the in vivo antitumor efficacy of ADG126 in syngeneic mouse tumor models.
It also targets regulatory T-cells for depletion within the TME by means of ADCC, to mediate antitumor T-cell immunity. 103 Table of Contents 104 Table of Contents We evaluated the in vivo antitumor efficacy of ADG126 in syngeneic mouse tumor models.
ADG206 demonstrated enhanced anti-tumor activity as a single agent and in combination with other checkpoint inhibitors, including anti-PD-1 or anti-CTLA-4 therapy. We believe that the safety and efficacy profiles of ADG206 strongly supports its potential as a combination agent. Clinical Development Status: ADG206 is currently in phase 1 development with monotherapy dose escalation ongoing.
ADG206 demonstrated enhanced anti-tumor activity as a single agent and in combination with other checkpoint inhibitors, including anti-PD-1 or anti-CTLA-4 therapy. We believe that the safety and efficacy profiles of ADG206 strongly supports its potential as a combination agent. Clinical Development Status: ADG206 is currently in phase 1 development.
If any patents issue from our pending patent applications, excluding any patent term adjustments and patent term extension, such patents will be expected to expire from 2033 to 2043.
If any patents issue from our pending patent applications, excluding any patent term adjustments and patent term extension, such patents will be expected to expire from 2033 to 2044.
The Regulations of the PRC on the Administration of Human Genetic Resources, which was promulgated by the State Council in May 2019 and came into effect in July 2019, further stipulates that, in order to obtain marketing authorization for relevant drugs and medical devices in China, no approval is required in international clinical trial cooperation using China’s human genetic resources at clinical institutions without export of human genetic resource materials.
The Regulations of the PRC on the Administration of Human Genetic Resources, which was promulgated by the State Council in May 2019 and the latest amendment was promulgated in March 2024 and came into effect in May 2024, further stipulates that, in order to obtain marketing authorization for relevant drugs and medical devices in China, no approval is required in international clinical trial cooperation using China’s human genetic resources at clinical institutions without export of human genetic resource materials.
The submission of a BLA requires payment of a substantial application user fee to the FDA unless a waiver or exemption applies. Once an original BLA has been submitted, FDA has 60 days to determine whether the application can be filed.
The submission of a BLA requires payment of a substantial application user fee to the FDA unless a waiver or exemption applies. 128 Table of Contents Once an original BLA has been submitted, FDA has 60 days to determine whether the application can be filed.
These anti-CTLA-4 therapies in development in China include HBM4003 from Harbour BioMed and CD1002 from CStone Pharmaceuticals (Suzhou) Co., Ltd. Major limitations of anti-CTLA-4 mAbs include toxicity. According to our internal market analysis, nivolumab and ipilimumab combination therapy has shown relatively higher toxicity in clinical studies even at lower dosages, which was observed from the published clinical data.
These anti-CTLA-4 therapies in development in China include HBM4003 from Harbour BioMed and CS1002/SHR-8068 from CStone/Hengrui Pharmaceuticals (Suzhou) Co., Ltd. Major limitations of anti-CTLA-4 mAbs include toxicity. According to our internal market analysis, nivolumab and ipilimumab combination therapy has shown relatively higher toxicity in clinical studies even at lower dosages, which was observed from the published clinical data.
ADG138 is currently IND-ready. ● ADG152 : This CD20xCD3 POWERbody integrates the company’s proprietary bispecific TCE platform with SAFEbody precision masking technology to minimize cytokine release syndrome (CRS) and on-target off-tumor toxicities for an increased therapeutic index.
ADG138 is currently IND-ready. 113 Table of Contents ● ADG152 : This CD20xCD3 POWERbody integrates the company’s proprietary bispecific TCE platform with SAFEbody precision masking technology to minimize cytokine release syndrome (CRS) and on-target off-tumor toxicities for an increased therapeutic index.
ADG206 incorporates SAFEbody precision masking technology and is designed to achieve improved safety and efficacy. ADG206 has demonstrated enhanced crosslinking by FcgRIIb in vitro upon activation and antitumor activity in vivo, while the SAFEbody masking technology limits on-target off-tumor toxicities by preferential activation in the TME.
ADG206 incorporates SAFEbody Ò precision masking technology and is designed to achieve improved safety and efficacy. ADG206 has demonstrated enhanced crosslinking by Fc g RIIb in vitro upon activation and antitumor activity in vivo, while the SAFEbody Ò masking technology limits on-target off-tumor toxicities by preferential activation in the TME.
As of February 29, 2024, Yervoy (ipilimumab) from BMS and Imjudo (tremelimumab) from AstraZeneca are the two marketed anti-CTLA-4 therapies approved by FDA for various cancer indications. Iplilimumab is approved both as a monotherapy and a combination therapy in seven indications, while tremelimumab is approved as a combination therapy for two indications.
As of February 28, 2025, Yervoy (ipilimumab) from BMS and Imjudo (tremelimumab) from AstraZeneca are the two marketed anti-CTLA-4 therapies approved by FDA for various cancer indications. Iplilimumab is approved both as a monotherapy and a combination therapy in seven indications, while tremelimumab is approved as a combination therapy for two indications.
It also remains uncertain whether the future regulatory changes will impose additional restrictions on companies like us. We cannot predict the impact of the Cybersecurity Review Measures and/or the Draft Data Security Regulations, if any, at this stage, and we will closely monitor and assess any development in the rule-making process.
It also remains uncertain whether the future regulatory changes will impose additional restrictions on companies like us. We cannot predict the impact of the Cybersecurity Review Measures and/or the Regulation on Network Data Security Management, if any, at this stage, and we will closely monitor and assess any development in the rule-making process.
Additionally, we have two IND-ready preclinical programs (ADG153, a masked, IgG1 anti-CD47 SAFEbody, and ADG138, a novel HER2xCD3 POWERbody bispecific TCE that is masked on both arms), as well as another preclinical program (ADG152, a CD20xCD3 POWERbody with masking on the CD3 arm) in the IND-enabling phase.
Additionally, we have two IND-ready preclinical programs (ADG138, a novel HER2xCD3 POWERbody Ò bispecific TCE that is masked on both arms, and ADG153, a masked, IgG1 anti-CD47 SAFEbody), as well as another preclinical program (ADG152, a CD20xCD3 POWERbody with masking on the CD3 arm) in the IND-enabling phase. We have multiple masked T-cell engagers in discovery.
Title of Patent Type of Patent (1) Jurisdiction 13877452.6 ​ An Integrated System for Library Construction, Affinity Binder Screening and Expression Thereof ​ Method ​ European Patent Office ​ 201380074656.1 ​ An Integrated System for Library Construction, Affinity Binder Screening and Expression Thereof ​ Method ​ China ​ 14908246.3 ​ Methods and Systems for Autoinduction of Protein Expression ​ Method ​ European Patent Office ​ 15536939 ​ Methods and Systems for Autoinduction of Protein Expression ​ Method ​ United States of America ​ 201480084652.6 ​ Methods and Systems for Autoinduction of Protein Expression ​ Method ​ China ​ 201410789857.6 ​ Filter Vector System And Its Applications ​ Method ​ China ​ 16108018 ​ Anti-CD137 Molecules and Use Thereof ​ Composition of matter ​ United States of America ​ 16640684 ​ Method for Treating Cancer using anti-CD137 antibody ​ Method ​ United States of America ​ 16640673 ​ Dynamic Human Antibody Light Chain Libraries ​ Library ​ United States of America ​ 16640679 ​ Dynamic Human Heavy Chain Antibody Libraries ​ Library ​ United States of America ​ 16265946 ​ Anti-CTLA-4 Antibodies And Methods of Making and Using the Same ​ Composition of matter ​ United States of America ​ 16966844 ​ Anti-CTLA4 Antibodies And Methods of Making and Using the Same ​ Composition of matter ​ United States of America ​ (1) You should read the Risk Factors included elsewhere in this annual report for important information about risks posed by the loss of patent protection, in particular the risks described under “Item 3 Key Information—3.D.Risk Factors—Risks Related to Our Intellectual Property.” We continually assess and refine our intellectual property strategy as we develop new platform technologies and product candidates.
Title of Patent Type of Patent (1) Jurisdiction 13877452.6 ​ An Integrated System for Library Construction, Affinity Binder Screening and Expression Thereof ​ Method ​ European Patent Office ​ 201380074656.1 ​ An Integrated System for Library Construction, Affinity Binder Screening and Expression Thereof ​ Method ​ China ​ 14908246.3 ​ Methods and Systems for Autoinduction of Protein Expression ​ Method ​ European Patent Office ​ 15536939 ​ Methods and Systems for Autoinduction of Protein Expression ​ Method ​ United States of America ​ 201480084652.6 ​ Methods and Systems for Autoinduction of Protein Expression ​ Method ​ China ​ 201410789857.6 ​ Filter Vector System And Its Applications ​ Method ​ China ​ 16108018 ​ Anti-CD137 Molecules and Use Thereof ​ Composition of matter ​ United States of America ​ 16640684 ​ Method for Treating Cancer using anti-CD137 antibody ​ Method ​ United States of America ​ 202010923848.7 ​ Anti-CD137 Molecules and Use Thereof ​ Composition of matter ​ China ​ 16640673 ​ Dynamic Human Antibody Light Chain Libraries ​ Library ​ United States of America ​ 201780095710.9 ​ Dynamic Human Antibody Light Chain Libraries ​ Library ​ China ​ 16640679 ​ Dynamic Human Heavy Chain Antibody Libraries ​ Library ​ United States of America ​ 201780094151.X ​ Dynamic Human Heavy Chain Antibody Libraries ​ Library ​ China ​ 16265946 ​ Anti-CTLA-4 Antibodies And Methods of Making and Using the Same ​ Composition of matter ​ United States of America ​ 16966844 ​ Anti-CTLA4 Antibodies And Methods of Making and Using the Same ​ Composition of matter ​ United States of America ​ 17043454 ​ Anti-PD-L1 Antibodies and Use Thereof ​ Composition of matter ​ United States of America ​ 16966848 ​ Activatable Antibodies and Methods of Making and Using thereof ​ Composition of matter ​ United States of America ​ (1) You should read the Risk Factors included elsewhere in this annual report for important information about risks posed by the loss of patent protection, in particular the risks described under “Item 3 Key Information—3.D.Risk Factors—Risks Related to Our Intellectual Property.” 123 Table of Contents We continually assess and refine our intellectual property strategy as we develop new platform technologies and product candidates.
However, the type, quantity and usage of the human genetic resource to be used shall be filed with the administrative department of science and technology under the State Council before clinical trials.
However, the type, quantity and usage of the human genetic resource to be used shall be filed with the administrative department of health under the State Council before clinical trials.
Product Candidates Title of Patent Application Type of Patent Applications (1) Jurisdiction ADG126 ​ Anti-CTLA-4 antibodies and methods of making and using the same ​ Composition of matter/ method of use/ method of making ​ United States of America, China and European Patent Office ​ ADG116 ​ Anti-CTLA-4 antibodies and methods of making and using the same ​ Composition of matter/ method of use/ method of making ​ United States of America, China and European Patent Office ​ ADG206 ​ Anti-CD137 antibodies and methods of making and using the same ​ Composition of matter/method of use/method of making ​ Patent Cooperation Treaty (2) ​ ADG106 ​ Anti-CD137 molecules and uses thereof Combination therapy comprising anti-CD137 antibodies ​ Composition of matter/ method of use/ method of making method of treatment/ method of use ​ United States of America China and European Patent Office ​ ADG104 ​ Anti-PD-L1 antibodies and use thereof ​ Composition of matter/ method of use/ method of making ​ United States of America and European Patent Office ​ ​ ADG125 ​ Anti-CSF1R molecules and use thereof ​ Composition of matter/method of use/method of making ​ United States of America and European Patent Office ​ (1) You should read the Risk Factors included elsewhere in this annual report for important information about risks posed by the loss of patent protection, in particular the risks described under “Item 3 Key Information—3.D.Risk Factors—Risks Related to Our Intellectual Property.” (2) Patent Application of ADG206 has not yet entered into national phase of Patent Cooperation Treaty. 114 Table of Contents The following table summarizes material issued patents in the United States, Europe and China covering our proprietary technologies and product candidates. ​ ​ Application No.
Product Candidates Title of Patent Application Type of Patent Applications (1) Jurisdiction ADG126 ​ Anti-CTLA-4 antibodies and methods of making and using the same ​ Composition of matter/ method of use/ method of making ​ United States of America, China and European Patent Office ​ ADG116 ​ Anti-CTLA-4 antibodies and methods of making and using the same ​ Composition of matter/ method of use/ method of making ​ United States of America, China and European Patent Office ​ ADG206 ​ Anti-CD137 antibodies and methods of making and using the same ​ Composition of matter/method of use/method of making ​ United States of America, China and European Patent Office ​ ADG106 ​ Anti-CD137 molecules and uses thereof Combination therapy comprising anti-CD137 antibodies ​ Composition of matter/ method of use/ method of making method of treatment/ method of use ​ United States of America China and European Patent Office ​ ADG104 ​ Anti-PD-L1 antibodies and use thereof ​ Composition of matter/ method of use/ method of making ​ United States of America and European Patent Office ​ ​ ADG125 ​ Anti-CSF1R molecules and use thereof ​ Composition of matter/method of use/method of making ​ United States of America and European Patent Office ​ (1) You should read the Risk Factors included elsewhere in this annual report for important information about risks posed by the loss of patent protection, in particular the risks described under “Item 3 Key Information—3.D.Risk Factors—Risks Related to Our Intellectual Property.” 122 Table of Contents The following table summarizes material issued patents in the United States, Europe and China covering our proprietary technologies and product candidates. ​ ​ Application No.
In addition to the marketed anti-CTLA-4 therapies, there are multiple “next generation” anti-CTLA-4 antibodies in clinical development globally. Examples of these programs include: Agenus (Zalifrelimab/AGEN1181), Bristol-Myers Squibb Company (BMS-986288), Merck (quavonlimab/MA-1308), Onco-C4, Inc. (ONC-392) and Xilio (XTX101). Yervoy was also approved in China in 2021, where additional CTLA-4 antibodies are in clinical development.
In addition to the marketed anti-CTLA-4 therapies, there are multiple “next generation” anti-CTLA-4 antibodies in clinical development globally. Examples of these programs include: Agenus (Zalifrelimab/AGEN1181), Merck (quavonlimab/MA-1308), Onco-C4, Inc. (ONC-392) and Xilio (XTX101). Yervoy was also approved in China in 2021, where additional CTLA-4 antibodies are in clinical development.
To further advance our pipeline, we have also put in place various clinical collaborations, including an agreement with Roche who is sponsoring and conducting a triple combination trial with ADG126, atezolizumab and bevacizumab in first-line hepatocellular carcinoma (HCC), clinical collaborations and supply agreements with Merck who will provide pembrolizumab for certain of our combination clinical trials, and an agreement with research organizations in Singapore for investigator-initiated trials of our ADG106 clinical candidate in combination settings.
To further advance our pipeline, we have also put in place various clinical collaborations, including an agreement with Roche who is sponsoring and conducting a triple combination trial with ADG126, atezolizumab and bevacizumab in first-line hepatocellular carcinoma (HCC), clinical collaborations and supply agreements with Merck who provides pembrolizumab for certain of our combination clinical trials, and agreements with research organizations in Singapore for investigator-initiated trials of our clinical candidates.
We reported data in 22 efficacy evaluable patients who received either 10 mg/kg Q6W (n=10) or 10 mg/kg Q3W (n=12). We also stratified the findings by peritoneal metastases, which is an indicator of rapidly progressing disease.
We reported data in 22 efficacy evaluable patients who received either 10 mg/kg Q6W (n=10) or 10 mg/kg Q3W (n=12) ADG126 in combination with pembrolizumab (200 mg, Q3W). We also stratified the findings by peritoneal metastases, which is an indicator of rapidly progressing disease.
Analysis of a clinical sample from a hepatocellular carcinoma (HCC) patient previously treated with atezolizumab and bevacizumab and then followed by lenvatinib demonstrated about nine-fold Teff/Treg improved ratio after dosing relative to before dosing due to reduction in Tregs and improvement in T effector cells.
Analysis of a clinical sample from a hepatocellular carcinoma (HCC) patient previously treated with atezolizumab and bevacizumab and then followed by lenvatinib demonstrated ADG126 monotherapy improved Teff/Treg ratio by approximately nine-fold relative to before dosing due to reduction in the Tregs and improvement in the T effector cells.
The presentation at AACR included a larger number of patients (N=30) and further reinforced the compelling, best-in-class safety profile at dosing levels up to 20 mg/kg in a heavily pretreated patient population (majority received ≥3 prior lines of therapy) once every three weeks with repeat dosing. No Grade 3 or higher TRAEs were reported.
The presentation at AACR included a larger number of patients (N=30) and further reinforced the compelling, best-in-class safety profile at dosing levels up to 20 mg/kg in a heavily pretreated patient population (majority received ≥3 prior lines of therapy) once every three weeks with repeat dosing.
The FDA closely regulates the marketing, labeling, advertising and promotion of biologics. A company can make only those claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.
A company can make only those claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion or advertising of off-label uses.
ADG152 is currently in the IND-enabling phase. ● CD28 T-cell engagers : We are developing anti-CD28 bispecific POWERbody TCEs that exhibit enormous potential to fulfill the promises of safe and durable T-cell mediated synergistic immunotherapies when combined with CD3 bispecific POWERbody TCEs and/or checkpoint inhibitors.
ADG153 is currently IND-ready. ● CD28 T-cell engagers : We are developing anti-CD28 bispecific POWERbody TCEs that exhibit enormous potential to fulfill the promises of safe and durable T-cell mediated synergistic immunotherapies when combined with CD3 bispecific POWERbody TCEs and/or checkpoint inhibitors.
Both patients had either liver or lung metastases. These results support further evaluation of ADG116 (which is the activated form of ADG126) in combination with pembrolizumab in difficult-to-treat and cold tumor types such as MSS-CRC. Clinical Development Status Clinical data to date has demonstrated that ADG116 is clinically active and ready to advance into further clinical development as resources allow.
Both patients had either liver or lung metastases. These results support further evaluation of ADG116 (which is the activated form of ADG126) in combination with pembrolizumab in difficult-to-treat and cold tumor types such as MSS-CRC. 109 Table of Contents Clinical Development Status Clinical data to date has demonstrated that ADG116 is clinically active.
In 2021, 2022 and 2023, Adagene Inc. made payments of US$30.0 million, US$24.5 million and US$20.5 million, respectively, in cash to Adagene Suzhou as consideration for providing services associated with research and development activities related to those intellectual properties owned by Adagene Inc.
In 2022, 2023 and 2024, Adagene Inc. made payments of US$24.5 million, US$20.5 million and US$16.3 million, respectively, in cash to Adagene Suzhou as consideration for providing services associated with research and development activities related to those intellectual properties owned by Adagene Inc.
This analysis suggests prolonged exposures of activated ADG126 in the tumor microenvironment (TME), with cleaved ADG126 on average accumulating ≥3-fold during repeat dosing, associated with the longer half-life of total ADG126 and its preferential accumulation in TME compared with its parental antibody.
This analysis suggests prolonged exposures of activated ADG126 in the tumor microenvironment (TME), with cleaved ADG126 on average accumulating ≥3-fold during repeat dosing; data also showed a longer half-life of total ADG126 and its preferential accumulation in TME compared with its parental antibody ADG116.
Thus, development of next generation anti-CTLA-4 therapies with an improved safety profile and antitumor efficacy through enhanced CTLA-4 blockage and/or Treg depletion are urgently needed to improve upon existing anti-CTLA-4 therapies, as well as open the new doors to treat cold tumors such as MSS-CRC.
Thus, development of next generation anti-CTLA-4 therapies with an improved safety profile and antitumor efficacy through enhanced CTLA-4 blockage and/or Treg depletion is urgently needed to improve upon existing anti-CTLA-4 therapies, as well as opens the new doors to treat immunogenically “cold” tumors such as MSS CRC.
In a four-week GLP repeat-dose toxicology studies, intravenous infusion of ADG126 to cynomolgus monkeys at 5, 30, or 200 mg/kg/dose once weekly for five doses followed by a 28-day recovery period was well-tolerated.
All mice survived after six treatments of ADG126 at 50 mg/kg. In a four-week GLP repeat-dose toxicology studies, intravenous infusion of ADG126 to cynomolgus monkeys at 5, 30, or 200 mg/kg/dose once weekly for five doses followed by a 28-day recovery period was well-tolerated.
Recently it was amended in December 2023 and will come into effect on July 1, 2024. According to the PRC Company Law, companies are generally classified into two categories: limited liability companies and companies limited by shares. The PRC Company Law also applies to foreign-invested limited liability companies.
Recently it was amended in December 2023 and has come into effect on July 1, 2024. According to the PRC Company Law, companies are generally classified into two categories: limited liability companies and companies limited by shares.
Pilot Plan for the MAH System The Innovation Opinions provide a pilot plan for the MAH system. 132 Table of Contents Under the authorization of the Standing Committee of the NPC, the General Office of the State Council issued the Pilot Plan for the Drug Marketing Authorization Holder Mechanism in May 2016, which provides a detailed pilot plan for the MAH system in 10 Chinese provinces.
Under the authorization of the Standing Committee of the NPC, the General Office of the State Council issued the Pilot Plan for the Drug Marketing Authorization Holder Mechanism in May 2016, which provides a detailed pilot plan for the MAH system in 10 Chinese provinces.
Clinical development of this candidate is ongoing. 111 Table of Contents 2019 Collaboration Agreements In May 2019, we entered into (i) a collaboration agreement that covers Greater China (the “Dragon Boat Greater China Agreement”) and (ii) a collaboration agreement that covers the regions other than Greater China (the “Dragon Boat ROW Agreement,” together with the Dragon Boat Greater China Agreement, the “2019 Dragon Boat Agreements”), with Dragon Boat Biopharmaceutical (Shanghai) Limited.
This program is currently in Phase 2 clinical development. 119 Table of Contents 2019 Collaboration Agreements In May 2019, we entered into (i) a collaboration agreement that covers Greater China (the “Dragon Boat Greater China Agreement”) and (ii) a collaboration agreement that covers the regions other than Greater China (the “Dragon Boat ROW Agreement,” together with the Dragon Boat Greater China Agreement, the “2019 Dragon Boat Agreements”), with Dragon Boat Biopharmaceutical (Shanghai) Limited.
Such laws include, without limitation: ● the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, to induce, or in return for, either the referral of an individual, or the purchase or recommendation of an item or service for which payment may be made under any federal healthcare program; ● federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment to the federal government, including federal healthcare programs, that are false or fraudulent; ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes which prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters, and which, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, also imposes certain requirements on HIPAA covered entities and their business associates relating to the privacy, security and transmission of individually identifiable health information; ● the U.S. federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to the federal government, information related to payments or other transfers of value made to physicians, as defined by such law, certain other health care providers beginning in 2022, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and ● United States state and foreign law equivalents of each of the above federal laws, which, in some cases, differ from each other in significant ways, and may not have the same effect, thus complicating compliance efforts, including laws governing the privacy and security of personal data, such as the GDPR, which imposes obligations and restrictions on the collection and use of personal data relating to individuals located in the EU and EEA (including with regard to health data). 124 Table of Contents If their operations are found to be in violation of any of such laws or any other governmental regulations that apply, they may be subject to significant penalties, including, without limitation, civil, criminal and administrative penalties, damages, fines, exclusion from government-funded healthcare programs, such as Medicare and Medicaid or similar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, disgorgement, imprisonment, contractual damages, reputational harm, diminished profits and the curtailment or restructuring of our operations.
Such laws include, without limitation: ● the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, to induce, or in return for, either the referral of an individual, or the purchase or recommendation of an item or service for which payment may be made under any federal healthcare program; ● federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment to the federal government, including federal healthcare programs, that are false or fraudulent; 132 Table of Contents ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes which prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters, and which, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, also imposes certain requirements on HIPAA covered entities and their business associates relating to the privacy, security and transmission of individually identifiable health information; ● the U.S. federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to the federal government, information related to payments or other transfers of value made to physicians, as defined by such law, certain other health care providers beginning in 2022, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and ● United States state and foreign law equivalents of each of the above federal laws, which, in some cases, differ from each other in significant ways, and may not have the same effect, thus complicating compliance efforts, including laws governing the privacy and security of personal data, such as the GDPR, which imposes obligations and restrictions on the collection and use of personal data relating to individuals located in the EU and EEA (including with regard to health data).

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Financing activities Net cash used in financing activities was US$5.4 million in 2023, which was mainly attributable to repayment of borrowings of US$13.5 million, offset by proceeds from borrowings of US$8.1 million .
Net cash used in financing activities was US$5.4 million in 2023, which was mainly attributable to repayment of borrowings of US$13.5 million, offset by proceeds from borrowings of US$8.1 million.
See “Item 3 Key Information— Risk Factors—Risks Related to Doing Business in the PRC—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” 150 Table of Contents Critical Accounting Policies and Judgments Basis of presentation Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S.
See “Item 3 Key Information— Risk Factors—Risks Related to Doing Business in the PRC—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” 158 Table of Contents Critical Accounting Policies and Judgments Basis of presentation Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S.
We believe that non-GAAP net loss and non-GAAP net loss per ordinary share for the year provide useful information about our results of operations, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by its management in our financial and operational decision-making. 157 Table of Contents Non-GAAP net loss and non-GAAP net loss per ordinary share for the year should not be considered in isolation or construed as an alternative to operating profit, loss for the year or any other measure of performance or as an indicator of its operating performance.
We believe that non-GAAP net loss and non-GAAP net loss per ordinary share for the year provide useful information about our results of operations, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by its management in our financial and operational decision-making. 165 Table of Contents Non-GAAP net loss and non-GAAP net loss per ordinary share for the year should not be considered in isolation or construed as an alternative to operating profit, loss for the year or any other measure of performance or as an indicator of its operating performance.
To date, we have not made any material adjustments to our prior estimates of research and development expenses. 162 Table of Contents Share based compensation Share-based compensation awards are measured at the grant date fair value of the awards and recognized as expenses a) immediately at the grant date if no vesting conditions are required; b) for share-based awards granted with only service conditions, using the straight-line method over the vesting period; or c) for share-based awards granted with service conditions and performance conditions, using the graded vesting method over the vesting period if and when the we conclude that it is probable that the performance conditions will be achieved.
To date, we have not made any material adjustments to our prior estimates of research and development expenses. 170 Table of Contents Share based compensation Share-based compensation awards are measured at the grant date fair value of the awards and recognized as expenses a) immediately at the grant date if no vesting conditions are required; b) for share-based awards granted with only service conditions, using the straight-line method over the vesting period; or c) for share-based awards granted with service conditions and performance conditions, using the graded vesting method over the vesting period if and when the we conclude that it is probable that the performance conditions will be achieved.
This is due to numerous risks and uncertainties associated with developing drugs, including the uncertainty of: ● the scope, rate of progress, results and cost of our clinical trials, preclinical studies and other related activities; ● the cost of manufacturing clinical supplies, and establishing commercial supplies, of any product candidates; ● the number and characteristics of product candidates that we pursue; ● the cost, timing and outcomes of regulatory approvals; 148 Table of Contents ● the cost and timing of establishing sales, marketing and distribution capabilities; and ● the terms and timing of any collaboration, licensing or other arrangements that we may establish, including any required milestone and royalty payments thereunder.
This is due to numerous risks and uncertainties associated with developing drugs, including the uncertainty of: ● the scope, rate of progress, results and cost of our clinical trials, preclinical studies and other related activities; 156 Table of Contents ● the cost of manufacturing clinical supplies, and establishing commercial supplies, of any product candidates; ● the number and characteristics of product candidates that we pursue; ● the cost, timing and outcomes of regulatory approvals; ● the cost and timing of establishing sales, marketing and distribution capabilities; and ● the terms and timing of any collaboration, licensing or other arrangements that we may establish, including any required milestone and royalty payments thereunder.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2023 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition. 5.E.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2024 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition. 5.E.
Dividends payable by an U.S. entity, to non-U.S. resident enterprises shall be subject to 30% withholding tax, unless the respective non-U.S. resident enterprise’s jurisdiction of incorporation has a tax treaty or arrangements with U.S. that provides for a reduced withholding tax rate or an exemption from withholding tax. 149 Table of Contents PRC Our subsidiary in China is incorporated under PRC law and, as such, is subject to PRC enterprise income tax on their taxable income in accordance with the relevant PRC income tax laws.
Dividends payable by an U.S. entity, to non-U.S. resident enterprises shall be subject to 30% withholding tax, unless the respective non-U.S. resident enterprise’s jurisdiction of incorporation has a tax treaty or arrangements with U.S. that provides for a reduced withholding tax rate or an exemption from withholding tax. 157 Table of Contents PRC Our subsidiary in China is incorporated under PRC law and, as such, is subject to PRC enterprise income tax on their taxable income in accordance with the relevant PRC income tax laws.
We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we: ● continue advancement of and investment in our proprietary DPL platform; ● advance the development of ADG126, ADG116, ADG206, ADG106 and other preclinical drug candidates; ● continue our ongoing and planned research and development of other lead product candidates; ● discover and develop additional antibody product candidates and further expand our preclinical and clinical product pipeline; ● maintain, expand and protect our intellectual property portfolio; ● expand our collaborations with contract manufacturing organizations and contract research organizations; ● seek regulatory approvals for any product candidates that successfully complete clinical trials; ● establish sales and marketing teams and distribution network to commercialize any product candidate for which we may obtain regulatory approval; ● attract, hire and retain additional clinical, scientific, management and administrative personnel; ● expand our operations globally; and ● incur additional costs associated with operating as a public company. 147 Table of Contents Key Components of Results of Operations Revenue Licensing and collaboration revenue.
We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we: ● continue advancement of and investment in our proprietary DPL platform; ● advance the development of ADG126, ADG206 and other preclinical drug candidates; ● continue our ongoing and planned research and development of other lead product candidates; ● discover and develop additional antibody product candidates and further expand our preclinical and clinical product pipeline; ● maintain, expand and protect our intellectual property portfolio; ● expand our collaborations with contract manufacturing organizations and contract research organizations; ● seek regulatory approvals for any product candidates that successfully complete clinical trials; ● establish sales and marketing teams and distribution network to commercialize any product candidate for which we may obtain regulatory approval; ● attract, hire and retain additional clinical, scientific, management and administrative personnel; ● expand our operations globally; and ● incur additional costs associated with operating as a public company. 155 Table of Contents Key Components of Results of Operations Revenue Licensing and collaboration revenue.
For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently. 151 Table of Contents Under the criteria of ASC 606, we recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services.
For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently. 159 Table of Contents Under the criteria of ASC 606, we recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services.
No provision for Hong Kong profits tax was made as there were no assessable profits derived from or earnings in Hong Kong for the years ended December 31, 2021, 2022 and 2023. United States Our subsidiary in the U.S., Adagene Incorporated, is incorporated in the U.S. and subject to U.S. federal corporate income tax at a rate of 21%.
No provision for Hong Kong profits tax was made as there were no assessable profits derived from or earnings in Hong Kong for the years ended December 31, 2022, 2023 and 2024. United States Our subsidiary in the U.S., Adagene Incorporated, is incorporated in the U.S. and subject to U.S. federal corporate income tax at a rate of 21%.
Research and development expenses are charged to expense as incurred when these expenditures relate to our research and development services and have no alternative future uses. As of December 31, 2023, we have several ongoing clinical studies in various clinical trial stages. The contracts with CRO and CMO are generally cancellable, with notice, at our option.
Research and development expenses are charged to expense as incurred when these expenditures relate to our research and development services and have no alternative future uses. As of December 31, 2024, we have several ongoing clinical studies in various clinical trial stages. The contracts with CRO and CMO are generally cancellable, with notice, at our option.
Actual results could materially differ from those estimates. 161 Table of Contents Certain of these estimates are considered critical as they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our consolidated financial statements. Our critical accounting estimates are summarized below.
Actual results could materially differ from those estimates. 169 Table of Contents Certain of these estimates are considered critical as they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our consolidated financial statements. Our critical accounting estimates are summarized below.
We have forged strategic collaborations with reputable global partners that leverage our technology in multiple approaches at the vanguard of science. 146 Table of Contents We aim to push the boundaries of antibody discovery and engineering through the precise design, construction, and selection of antibody product candidates intractable to traditional antibody technology.
We have forged strategic collaborations with reputable global partners that leverage our technology in multiple approaches at the vanguard of science. 154 Table of Contents We aim to push the boundaries of antibody discovery and engineering through the precise design, construction, and selection of antibody product candidates intractable to traditional antibody technology.
Our licensing and collaboration revenue is currently comprised of upfront and/or milestone payments associated with out-licensing arrangements. Our licensing and collaboration revenue for the years ended December 31, 2021, 2022 and 2023 was primarily derived from granting licenses to use and otherwise exploit certain of our intellectual properties.
Our licensing and collaboration revenue is currently comprised of upfront and/or milestone payments associated with out-licensing arrangements. Our licensing and collaboration revenue for the years ended December 31, 2022, 2023 and 2024 was primarily derived from granting licenses to use and otherwise exploit certain of our intellectual properties.
An entity could apply for the TASE certificate every year. Adagene Suzhou was first recognized as a qualified TASE in March 2015 and renewed in December 2018 and December 2021. Adagene Suzhou can enjoy the preferential tax rate of 15% from 2015 to at least November 2024.
An entity could apply for the TASE certificate every year. Adagene Suzhou was first recognized as a qualified TASE in March 2015 and renewed in December 2018, December 2021 and December 2024. Adagene Suzhou can enjoy the preferential tax rate of 15% from 2015 to at least December 2027.
The carrying amount of long-term borrowings approximate their fair values since they bear interest rates which approximate market interest rates. We did not transfer any assets or liabilities in or out of Level 3 during the year ended December 31, 2022 or 2023.
The carrying amount of long-term borrowings approximate their fair values since they bear interest rates which approximate market interest rates. We did not transfer any assets or liabilities in or out of Level 3 during the year ended December 31, 2023 or 2024.
We did not record any accrued expenses related to cancellation of CRO or CMO contracts as of December 31, 2022 or 2023 as we did not have any plan to cancel the existing CRO or CMO contracts. Income taxes We follow the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes , or ASC 740.
We did not record any accrued expenses related to cancellation of CRO or CMO contracts as of December 31, 2023 or 2024 as we did not have any plan to cancel the existing CRO or CMO contracts. Income taxes We follow the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes , or ASC 740.
Level 3—Unobservable inputs which are supported by little or no market activity. 152 Table of Contents ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach.
Level 3—Unobservable inputs which are supported by little or no market activity. 160 Table of Contents ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach.
Based on our current operating plan, we believe that our current cash and cash equivalents will be sufficient to meet our current and anticipated working capital requirements and capital expenditures for at least the next 12 months, and expect that our current cash balance will be sufficient to fund operations into 2026.
Based on our current operating plan, we believe that our current cash and cash equivalents will be sufficient to meet our current and anticipated working capital requirements and capital expenditures for at least the next 12 months, and expect that our current cash balance will be sufficient to fund operations into the end of 2026.
It is our policy to recognize interest and penalties related to unrecognized tax benefits, if any, as a component of income tax expense. 153 Table of Contents We have incurred net accumulated operating losses for income tax purposes since our inception.
It is our policy to recognize interest and penalties related to unrecognized tax benefits, if any, as a component of income tax expense. 161 Table of Contents We have incurred net accumulated operating losses for income tax purposes since our inception.
Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encoruage investors and others to review our financial information in its entirety and not rely on a single financial measure.
Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.
Under the current laws of the Cayman Islands, we are not subject to income, corporation or capital gains tax in the Cayman Islands. In addition, our payment of dividends, if any, is not subject to withholding tax in the Cayman Islands.
Taxation Cayman Islands We are incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, we are not subject to income, corporation or capital gains tax in the Cayman Islands. In addition, our payment of dividends, if any, is not subject to withholding tax in the Cayman Islands.
We are combining computational biology and artificial intelligence to design novel antibodies that address unmet patient needs. Powered by our proprietary Dynamic Precision Library (DPL) platform, which fuels our NEObody™, SAFEbody ® , and POWERbody™ technologies, we are developing a highly differentiated pipeline of novel immunotherapies.
We are combining computational biology and intelligent technologies to design novel antibodies that address unmet patient needs. Powered by our proprietary Dynamic Precision Library (DPL) platform, which fuels our NEObody®, SAFEbody®, and POWERbody® technologies, we are developing a highly differentiated pipeline of novel immunotherapies.
Investing activities Net cash used in investing activities was US$0.1 million in 2023, which was primarily attributable to the purchase of property, equipment and software. The Group also made short-term investments in certain money market funds during 2023.
The Group also made short-term investments in certain money market funds during 2023. Net cash used in investing activities was US$0.7 million in 2022, which was primarily attributable to the purchase of property, equipment and software.
We had no financial assets and liabilities measured and recorded at fair value on a nonrecurring basis as of December 31, 2022 and 2023.
We had no financial assets and liabilities measured and recorded at fair value on a nonrecurring basis as of December 31, 2023 and 2024.
We believe that it is more likely than not that these net accumulated operating losses will not be utilized in the near future. Therefore, we have provided full valuation allowances for the deferred tax assets for subsidiaries other than the U.S. subsidiary as of December 31, 2021 and for all subsidiaries as of December 31, 2022 and 2023.
We believe that it is more likely than not that these net accumulated operating losses will not be utilized in the near future. Therefore, we have provided full valuation allowances for the deferred tax assets for all subsidiaries as of December 31, 2022, 2023 and 2024.
The assumptions used to estimate the fair value of the share options granted are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year eneded December 31, ​ 2021 2022 2023 ​ ​ ​ ​ ​ ​ ​ ​ Risk-free interest rate 1.11% - 1.67 % 1.92% - 4.25 % 3.38% - 4.86 % Dividend yield 0 % 0 % 0 % Expected volatility range 73.1% - 75.5 % 74.2% - 74.9 % 72.6% - 73.1 % Exercise multiple 2.2 – 2.8 2.2 – 2.8 ​ 2.2 – 2.8 ​ Contractual life 10 years 10 years ​ 10 years ​ ​ Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred.
The assumptions used to estimate the fair value of the share options granted are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2022 2023 2024 ​ ​ ​ ​ ​ ​ ​ ​ Risk-free interest rate 1.92% - 4.25 % 3.38% - 4.86 % 4.18% – 4.59 % Dividend yield 0 % 0 % 0 % Expected volatility range 74.2% - 74.9 % 72.6% - 73.1 % 73.3% – 75.6 % Exercise multiple 2.2 – 2.8 2.2 – 2.8 ​ 2.2 – 2.8 ​ Contractual life 10 years 10 years ​ 10 years ​ ​ Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred.
Our capital expenditures were US$2.5 million, US$0.7 million and US$0.1 million in 2021, 2022 and 2023, respectively. We intend to fund our future capital expenditures with our existing cash balance. Holding Company Structure Adagene Inc. is a holding company with no material operations of its own.
Our capital expenditures were US$0.7 million, US$0.1 million and US$34 thousand in 2022, 2023 and 2024, respectively. We intend to fund our future capital expenditures with our existing cash balance. Holding Company Structure Adagene Inc. is a holding company with no material operations of its own.
Other operating income, net: Other operating income, net was US$3.5 million for the year ended December 31, 2023. Other operating income, net included a one-time compensation payment from a contract manufacturer for a preclinical-related outsourcing arrangement.
Other operating income, net: Other operating income, net was nil for the year ended December 31, 2024. Other operating income, net of US$3.5 million recognized in 2023 included a one-time compensation payment from a contract manufacturer for a preclinical-related outsourcing arrangement.
Our net losses were US$73.2 million, US$80.0 million and US$18.9 million for the years ended December 31, 2021, 2022 and 2023, respectively. As of December 31, 2023, we had accumulated deficit of US$277.8 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future.
Our net losses were US$80.0 million, US$18.9 million and US$33.4 million for the years ended December 31, 2022, 2023 and 2024, respectively. As of December 31, 2024, we had accumulated deficit of US$311.2 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future.
As of December 31, 2023, we had US$109.9 million in cash and cash equivalents. 158 Table of Contents We intend to finance our future working capital requirements and capital expenditures primarily from funds raised from financing activities, including the net proceeds received from our initial public offering, future public and private offerings of our securities, proceeds from our collaborations, and/or proceeds from borrowings.
As of December 31, 2024, we had US$85.2 million in cash and cash equivalents. 166 Table of Contents We intend to finance our future working capital requirements and capital expenditures primarily from funds raised from financing activities, including the net proceeds received from our initial public offering and our ATM Offering program, future public and private offerings of our securities, proceeds from our collaborations, and/or proceeds from borrowings.
Administrative expenses Our administrative expenses decreased by 27.0% from US$11.9 million for the year ended December 31, 2022 to US$8.7 million for the year ended December 31, 2023, due to both a reduction in personnel and in office-related expenses as a result of implementation of cost-control measures.
Administrative expenses Our administrative expenses decreased by 16.1% from US$8.7 million for the year ended December 31, 2023 to US$7.3 million for the year ended December 31, 2024, due to both a reduction in personnel and in office-related expenses as a result of cost-control measures.
Research and development expenses The following table sets forth a breakdown of the major components of our research and development expenses in absolute amounts and as a percentage of our total research and development expenses for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ December 31, ​ ​ 2022 ​ 2023 ​ US$ % US$ % ​ ​ (in thousands, except percentages) Research and development expenses ​ Payroll and other related costs of personnel ​ 24,093 29.6 % 18,492 50.5 % Costs related to clinical programs ​ 29,384 36.2 % 12,264 33.5 % Costs related to clinical trials ​ 14,277 17.6 % 11,162 30.5 % CMC and toxicology costs associated with the clinical programs ​ 15,107 18.6 % 1,102 3.0 % Costs related to preclinical testing of non-clinical programs ​ 20,697 25.4 % 978 2.7 % Costs required to develop the product candidates ​ 2,216 2.7 % 1,449 4.0 % Other research and development expenses ​ 4,950 ​ 6.1 % 3,456 ​ 9.4 % Total ​ 81,340 ​ 100 % 36,639 ​ 100.0 % ​ Our research and development expenses decreased by 55.0% from US$81.3 million for the year ended December 31, 2022 to US$36.6 million for the year ended December 31, 2023, reflecting clinical focus on and prioritization of the company’s masked, anti-CTLA-4 SAFEbody ADG126.
Research and development expenses The following table sets forth a breakdown of the major components of our research and development expenses in absolute amounts and as a percentage of our total research and development expenses for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ December 31, ​ ​ 2023 ​ 2024 ​ US$ % US$ % ​ ​ (in thousands, except percentages) Research and development expenses ​ Payroll and other related costs of personnel ​ 18,492 50.5 % 14,489 50.3 % Costs related to clinical programs ​ 12,264 33.5 % 10,067 35.0 % Costs related to clinical trials ​ 11,162 30.5 % 8,927 31.0 % CMC and toxicology costs associated with the clinical programs ​ 1,102 3.0 % 1,140 4.0 % Costs related to preclinical testing of non-clinical programs ​ 978 2.7 % 396 1.4 % Costs required to develop the product candidates ​ 1,449 4.0 % 948 3.3 % Other research and development expenses ​ 3,456 ​ 9.4 % 2,881 ​ 10.0 % Total ​ 36,639 ​ 100.0 % 28,781 ​ 100.0 % ​ Our research and development expenses decreased by 21.4% from US$36.6 million for the year ended December 31, 2023 to US$28.8 million for the year ended December 31, 2024, reflecting clinical focus on and prioritization of the company’s masked, anti-CTLA-4 SAFEbody ADG126.
Operating and Financial Review and Prospects – 5.A Operating Results —Year Ended December 31, 2022 Compared to Year Ended December 31, 2021” beginning on page 165 of our annual report on Form 20-F for the year ended December 31, 2022 filed with the Securities and Exchange Commission on April 28, 2022.
Operating and Financial Review and Prospects—5.A Operating Results—Year Ended December 31, 2023 Compared to Year Ended December 31, 2022” beginning on page 156 of our annual report on Form 20-F for the year ended December 31, 2023 filed with the Securities and Exchange Commission on March 29, 2024.
Net cash generated from financing activities was US$17.8 million in 2022, which was mainly attributable to proceeds from borrowings of US$25.8 million, offset by (i) repayment of borrowings of US$4.4 million, and (ii) purchase of treasury shares under stock repurchase program of US$4.0 million.
Net cash generated from financing activities was US$17.8 million in 2022, which was mainly attributable to proceeds from borrowings of US$25.8 million, offset by (i) repayment of borrowings of US$4.4 million, and (ii) purchase of treasury shares under stock repurchase program of US$4.0 million. 168 Table of Contents Capital Expenditures Our capital expenditures are incurred primarily in connection with research and development equipment.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ December 31, ​ ​ 2021 2022 2023 ​ ​ US$ ​ US$ ​ US$ ​ ​ (in thousands, except per share information) ​ ​ ​ ​ ​ ​ ​ Revenue: Licensing and collaboration revenue 10,175 9,293 18,111 Operating expenses and income: ​ ​ Research and development expenses (68,099) (81,340) (36,639) Administrative expenses (14,440) (11,874) (8,673) Other operating income, net — — 3,481 Loss from operations (72,364) (83,921) (23,720) Interest income 76 378 4,283 Interest expense (364) (693) (1,108) Other income, net 1,779 2,168 1,844 Foreign exchange gain (loss), net (603) 2,555 1,446 Loss before income tax (71,476) (79,513) (17,255) Income tax expense (1,702) (459) (1,691) Net loss attributable to Adagene Inc.’s shareholders (73,178) (79,972) (18,946) Other comprehensive income (loss): ​ Foreign currency translation adjustments, net of nil tax 257 (755) (951) Total comprehensive loss attributable to Adagene Inc.’s shareholders (72,921) (80,727) (19,897) Net loss attributable to Adagene Inc.’s shareholders (73,178) (79,972) (18,946) Accretion of convertible redeemable preferred shares to redemption value (28) — — Net loss attributable to ordinary shareholders (73,206) (79,972) (18,946) Weighted average number of ordinary shares used in per share calculation: ​ —Basic 50,032 54,135 54,738 —Diluted 50,032 54,135 54,738 Net loss per ordinary share ​ —Basic (1.46) (1.48) (0.35) —Diluted (1.46) (1.48) (0.35) ​ 155 Table of Contents Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Licensing and collaboration revenue Our licensing and collaboration revenue was US$18.1 million for the year ended December 31, 2023, compared to US$9.3 million for the year ended December 31, 2022.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ December 31, ​ ​ 2022 2023 2024 ​ ​ US$ ​ US$ ​ US$ ​ ​ (in thousands, except per share information) ​ ​ ​ ​ ​ ​ ​ Revenue: Licensing and collaboration revenue 9,293 18,111 103 Operating expenses and income: ​ ​ ​ Research and development expenses (81,340) (36,639) (28,781) Administrative expenses (11,874) (8,673) (7,274) Other operating income, net — 3,481 — Loss from operations (83,921) (23,720) (35,952) Interest income 378 4,283 3,801 Interest expense (693) (1,108) (852) Other income, net 2,168 1,844 467 Foreign exchange gain (loss), net 2,555 1,446 (906) Loss before income tax (79,513) (17,255) (33,442) Income tax benefit (expense) (459) (1,691) 18 Net loss attributable to Adagene Inc.’s shareholders (79,972) (18,946) (33,424) Other comprehensive income (loss): ​ Foreign currency translation adjustments, net of nil tax (755) (951) 1,273 Total comprehensive loss attributable to Adagene Inc.’s shareholders (80,727) (19,897) (32,151) Net loss attributable to Adagene Inc.’s shareholders (79,972) (18,946) (33,424) Net loss attributable to ordinary shareholders (79,972) (18,946) (33,424) Weighted average number of ordinary shares used in per share calculation: ​ —Basic 54,135 54,738 56,288 —Diluted 54,135 54,738 56,288 Net loss per ordinary share ​ ​ ​ —Basic (1.48) (0.35) (0.59) —Diluted (1.48) (0.35) (0.59) ​ 163 Table of Contents Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Licensing and collaboration revenue Our licensing and collaboration revenue was US$0.1 million for the year ended December 31, 2024, compared to US$18.1 million for the year ended December 31, 2023.
In addition, the subsidiary in Australia received research and development tax incentive from the Australian Taxation Office. The tax incentive was recognized as other income upon receipt as the incentive was not dependent upon having a tax liability and further performance by the Group was not required. Taxation Cayman Islands We are incorporated in the Cayman Islands.
In addition, the subsidiary in Australia received research and development tax incentive in cash from the Australian Taxation Office in the years ended December 31, 2022 and 2023. Such tax incentive was recognized as other income upon receipt as the incentive was not dependent upon having a tax liability and further performance by the Group was not required.
Income tax expense Our income tax expense was US$0.5 million for the year ended December 31, 2022 as compared to US$1.7 million for the year ended December 31, 2023.
Income tax benefit (expense) Our income tax expense was US$1.7 million for the year ended December 31, 2023 as compared to income tax benefit of US$18 thousand for the year ended December 31, 2024.
The following table presents our selected consolidated cash flow data for the years ended December 31, 2021, 2022 and 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ December 31, ​ 2021 2022 2023 ​ ​ US$ ​ US$ ​ US$ ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ Net cash used in operating activities (43,415) (48,612) (28,455) Net cash used in investing activities (2,510) (686) (77) Net cash (used in) generated from financing activities 145,357 17,823 (5,367) Effect of exchange rate on cash and cash equivalents (192) 843 74 Net increase (decrease) in cash and cash equivalents 99,240 (30,632) (33,825) Cash and cash equivalents at the beginning of year 75,151 174,391 143,759 Cash and cash equivalents at the end of year 174,391 143,759 109,934 ​ 159 Table of Contents Operating activities Net cash used in operating activities was US$28.5 million in 2023.
The following table presents our selected consolidated cash flow data for the years ended December 31, 2022, 2023 and 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ December 31, ​ 2022 2023 2024 ​ ​ US$ ​ US$ ​ US$ ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ Net cash used in operating activities (48,612) ​ (28,455) ​ (29,701) Net cash generated from (used in) investing activities (686) ​ (77) ​ 1,110 Net cash generated from (used in) financing activities 17,823 ​ (5,367) ​ 3,769 Effect of exchange rate on cash and cash equivalents 843 ​ 74 ​ 83 Net decrease in cash and cash equivalents (30,632) ​ (33,825) ​ (24,739) Cash and cash equivalents at the beginning of year 174,391 ​ 143,759 ​ 109,934 Cash and cash equivalents at the end of year 143,759 ​ 109,934 ​ 85,195 ​ 167 Table of Contents Operating activities Net cash used in operating activities was US$29.7 million in 2024.
Net loss attributable to Adagene Inc.’s shareholders Our net loss for the period decreased by 76.3% from US$80.0 million for the year ended December 31, 2022 to US$18.9 million for the year ended December 31, 2023.
Net loss attributable to Adagene Inc.’s shareholders Our net loss for the year increased by 76.4% from US$18.9 million for the year ended December 31, 2023 to US$33.4 million for the year ended December 31, 2024.
The Non-GAAP net loss was US$11.7 million for the year ended December 31, 2023, as compared to US$69.5 million for the year ended December 31, 2022. Non-GAAP net loss per ordinary share for the year ended December 31, 2023 on both basic and diluted basis was US$0.21.
Non-GAAP net loss per ordinary share for the year ended December 31, 2024 on both basic and diluted basis was US$0.51. Non-GAAP net loss per ordinary share for the year ended December 31, 2023 on both basic and diluted basis was US$0.21.
We do not have any product candidates approved for sale and have not generated any revenue from product sales. We have financed operations mainly through the private placements of our preferred shares before our initial public offering completed in February 2021 and through proceeds received from the initial public offering. Since inception, we have incurred significant operating losses.
We have financed operations mainly through the private placements of our preferred shares before our initial public offering completed in February 2021, and proceeds received from the initial public offering and our at-the-market equity offering program. Since inception, we have incurred significant operating losses.
Reconciliation of GAAP and Non-GAAP Results ​ ​ ​ ​ ​ ​ ​ ​ For the years ended ​ ​ December 31, ​ ​ 2021 2022 2023 ​ ​ US$ ​ US$ ​ US$ GAAP net loss attributable to ordinary shareholders ​ (73,206,488) ​ (79,971,847) ​ (18,946,370) Add back: ​ ​ ​ ​ Share-based compensation expense 18,679,658 10,520,282 ​ 7,271,700 Accretion of convertible redeemable preferred shares to redemption value 28,553 — ​ — Non-GAAP net loss attributable to ordinary shareholders (54,498,277) (69,451,565) ​ (11,674,670) Weighted average number of ordinary shares used in per share calculation: ​ ​ ​ ​ —Basic 50,032,009 54,135,084 ​ 54,737,530 —Diluted 50,032,009 54,135,084 ​ 54,737,530 Non-GAAP net loss per ordinary share ​ ​ ​ ​ —Basic (1.09) (1.28) ​ (0.21) —Diluted (1.09) (1.28) ​ (0.21) ​ ​ ​ 5.B.
Reconciliation of GAAP and Non-GAAP Results ​ ​ ​ ​ ​ ​ ​ ​ For the years ended ​ ​ December 31, ​ ​ 2022 2023 2024 ​ ​ US$ ​ US$ ​ US$ GAAP net loss attributable to ordinary shareholders ​ (79,971,847) ​ (18,946,370) ​ (33,424,111) Add back: ​ ​ ​ ​ ​ Share-based compensation expense 10,520,282 ​ 7,271,700 ​ 4,909,573 Non-GAAP net loss attributable to ordinary shareholders (69,451,565) ​ (11,674,670) ​ (28,514,538) Weighted average number of ordinary shares used in per share calculation: ​ ​ ​ ​ ​ —Basic 54,135,084 ​ 54,737,530 ​ 56,287,903 —Diluted 54,135,084 ​ 54,737,530 ​ 56,287,903 Non-GAAP net loss per ordinary share ​ ​ ​ ​ ​ —Basic (1.28) ​ (0.21) ​ (0.51) —Diluted (1.28) ​ (0.21) ​ (0.51) ​ ​ ​ 5.B.
Our research and development expenses consist principally of (1) payroll and other related costs of personnel engaged in research and development activities, (2) costs related to pre-clinical testing of our technologies under development and clinical trials such as payments to contract research organizations, or CRO, and contract manufacturing organization, or CMO, investigators and clinical trial sites that conduct the clinical studies, (3) costs to develop the product candidates, including raw materials and supplies, product testing, depreciation and amortization, and facility related expenses, and (4) other research and development expenses.
Our direct research and development expenses consist principally of (1) costs related to clinical trials such as payments to contract research organizations, or CRO, and contract manufacturing organization, or CMO, investigators and clinical trial sites that conduct the clinical studies, (2) costs to develop the product candidates, including product testing.
The timing of expenses is impacted by the commencement of clinical trials and enrollment of patients in clinical trials. The successful development of our product candidates is uncertain.
Our research and development expenses may vary substantially from period to period according to the status of our research and development activities. The timing of expenses is impacted by the commencement of clinical trials and enrollment of patients in clinical trials. The successful development of our product candidates is uncertain.
Non-GAAP net loss per ordinary share for the year ended December 31, 2022 on both basic and diluted basis was US$1.28. We use non-GAAP net loss and non-GAAP net loss per ordinary share for the year, which are non-GAAP financial measures, in evaluating our operating results and for financial and operational decision-making purposes.
We use non-GAAP net loss and non-GAAP net loss per ordinary share for the year, which are non-GAAP financial measures, in evaluating our operating results and for financial and operational decision-making purposes.
Other income Our other income decreased from US$2.2 million for the year ended December 31, 2022 to US$1.8 million for the year ended December 31, 2023, primarily attributable to a decrease in government subsidies received by Adagene Suzhou to support our ongoing operations in Jiangsu Province during the year ended December 31, 2023, offset by an increase in the research and development tax incentive from the Australian Taxation Office received by Adagene Australia Pty Ltd, our wholly-owned subsidiary in Australia.
This decrease was primarily attributable to decrease in both interest rate and the amount of term deposits placed. 164 Table of Contents Other income, net Our other income, net decreased from US$1.8 million for the year ended December 31, 2023 to US$0.5 million for the year ended December 31, 2024, primarily attributable to decrease in government subsidies received by Adagene Suzhou to support our ongoing operations in Jiangsu Province during the year ended December 31, 2024 and decrease in the research and development tax incentive in cash from the Australian Taxation Office received by Adagene Australia Pty Ltd, our wholly-owned subsidiary in Australia.
This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report.
Results of Operations The following table summarizes our consolidated results of operations for the periods presented. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report.
Non-GAAP net loss and non-GAAP net loss per ordinary share for the year represent net loss attributable to ordinary shareholders for the year excluding (i) share-based compensation expenses, and (ii) accretion of convertible redeemable preferred shares to redemption value.
Non-GAAP net loss and non-GAAP net loss per ordinary share for the year represent net loss attributable to ordinary shareholders for the year excluding share-based compensation expenses.
The difference between our net loss of US$73.2 million and the net cash used in operating activities was mainly due to (i) an increase of accounts receivable of US$3.0 million due to milestone payment from Exelixis, Inc. which was received in January 2022, (ii) an increase in prepayments and other current assets of US$0.2 million due to our prepaid service fees to our vendors, and (iii) an increase in amount due from related parties of US$4.4 million due to prepayments made to our related parties, offset by (i) non-cash share-based compensation expenses of US$18.7 million, (ii) an increase in accounts payable of US$1.5 million, (iii) an increase in contract liabilities of US$4.8 million, (iv) an increase in amount due to related parties of US$7.9 million, (v) an increase in accruals and other current liabilities of US$1.1 million, (vi) an increase in income tax payable of US$1.7 million, and (vii) depreciation and amortization of US$1.1 million.
The difference between our net loss of US$33.4 million and the net cash used in operating activities was mainly due to (i) income from short-term investments of US$1.1 million, (ii) a decrease in amount due to related parties of US$3.5 million as a result of payments made to the related parties, (iii) a decrease in accruals and other current liabilities of US$0.2 million, and (iv) a decrease in lease liabilities of US$0.2 million, offset by (i) non-cash share-based compensation expenses of US$4.9 million, (ii) a decrease in prepayments and other current assets of US$0.7 million, (iii) a decrease in amounts due from related parties of US$0.2 million, (iv) an increase in accounts payable of US$1.1 million, (v) depreciation and amortization of US$0.7 million, and (vi) amortization of right-of use assets and interest of lease liabilities of US$0.2 million.
The 2023 net loss was lower due to combined impact of increases in licensing and collaboration revenue recognized from collaboration and technology licensing agreements with Sanofi and Exelixis, and decreases in both research and development expenses and administrative expenses. Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 See “Item 5.
The 2024 net loss was higher due to significant decrease in licensing and collaboration revenue recognized contracts with customers, offset by decreases in both research and development expenses and administrative expenses. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 See “Item 5.
Net cash used in operating activities was US$43.4 million in 2021.
Net cash used in operating activities was US$28.5 million in 2023.
Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statements of comprehensive loss over the period of the borrowings using the effective interest method.
Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statements of comprehensive loss over the period of the borrowings using the effective interest method. 162 Table of Contents Recent accounting pronouncements A list of recent relevant accounting pronouncements is included in Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included elsewhere in this annual report.
The income tax expense for the year ended December 31, 2023 was primarily attributable to the current tax expenses on income reported by Adagene Incorporated, our wholly owned subsidiary in the U.S.
The income tax benefit for the year ended December 31, 2024 was primarily attributable to the current tax benefit resulted from the significant decrease of revenue and application of tax deductions and tax credit by Adagene Incorporated, our wholly owned subsidiary in the U.S.
Loss from operations As a result of the foregoing, our loss from operations decreased by 71.7% from US$83.9 million in 2022 to US$23.7 million in the year ended December 31, 2023. 156 Table of Contents Interest income Our interest income was US$4.3 million for the year ended December 31, 2023 as compared to US$0.4 million for the year ended December 31, 2022.
Loss from operations As a result of the foregoing, our loss from operations increased by 51.6% from US$23.7 million for the year ended December 31, 2023 to US$36.0 million for the year ended December 31, 2024.
For the year ended December 31, 2021, 2022 and 2023, income tax expense was US$1.7 million, US$0.5 million and US$1.7 million due to taxable profits generated by the U.S. subsidiary, respectively. Share-based compensation We grant restricted shares and stock options to eligible employees and nonemployees and accounts for share-based compensation in accordance with ASC 718, Compensation—Stock Compensation.
For the year ended December 31, 2022 and 2023, income tax expense was US$0.5 million and US$1.7 million due to taxable profits generated by the U.S. subsidiary, respectively. For the year ended December 31, 2024, income tax benefit was US$18 thousand due to decrease in revenue and application of tax deductions and tax credits.
Net cash used in investing activities was US$0.7 million in 2022, which was primarily attributable to the purchase of property, equipment and software. Net cash used in investing activities was US$2.5 million in 2021, which was attributable to the purchase of property, equipment and software.
Investing activities Net cash generated from investing activities was US$1.1 million in 2024, which was primarily attributable to income generated from the company’s short-term investments in certain money market funds during 2024. Net cash used in investing activities was US$0.1 million in 2023, which was primarily attributable to the purchase of property, equipment and software.
The following table summarizes our research and development expenses for our clinical-stage product candidates, preclinical product candidates and research pipeline for the years ended December 31, 2021, 2022 and 2023, respectively. ​ ​ ​ ​ ​ ​ ​ ​ For the Year ​ ​ Ended ​ ​ December 31, ​ ​ 2021 2022 2023 ​ ​ US$ ​ US$ ​ US$ ​ ​ (in thousands) ADG126 ​ 3,543 ​ 19,229 ​ 20,855 ADG116 ​ 11,236 ​ 15,271 ​ 5,779 ADG106 14,798 4,604 2,209 Preclinical product candidates, research pipeline and others 38,522 42,236 7,796 Total 68,099 81,340 36,639 ​ At this time, we cannot reasonably estimate the nature, timing and estimated costs of the efforts that will be necessary to complete the development of, or the period, if any, in which material net cash inflows may commence from, any of our product candidates.
The following table summarizes our research and development expenses for our clinical-stage product candidates, preclinical product candidates and research pipeline for the years ended December 31, 2022, 2023 and 2024, respectively. ​ ​ ​ ​ ​ ​ ​ ​ For the Year ​ ​ Ended ​ ​ December 31, ​ ​ 2022 2023 2024 ​ ​ US$ ​ US$ ​ US$ ​ ​ (in thousands) Direct research and development expenses: ​ ​ ADG126 ​ 12,363 ​ 8,362 ​ 8,297 ADG116 ​ 9,818 ​ 2,317 ​ 1,079 ADG106 2,960 886 164 Preclinical product candidates, research pipeline and others 23,896 1,549 859 Total direct research and development expenses 49,037 13,114 10,399 Indirect research and development expenses: ​ ​ ​ ​ ​ ​ Payroll and other related costs of personnel ​ 24,093 ​ 18,492 ​ 14,489 Lab supplies and other research and development expenses ​ 8,210 ​ 5,033 ​ 3,893 Total indirect research and development expenses 32,303 23,525 18,382 Total research and development expenses 81,340 36,639 28,781 ​ At this time, we cannot reasonably estimate the nature, timing and estimated costs of the efforts that will be necessary to complete the development of, or the period, if any, in which material net cash inflows may commence from, any of our product candidates.
We also have a robust preclinical pipeline of four programs in IND-enabling studies, including a masked anti-CD47 SAFEbody, as well as over 50 programs in various stages of discovery. Since our inception in 2011, our operations have focused on organizing and staffing our company, conducting preclinical studies and clinical trials, business planning, establishing our intellectual property portfolio and raising capital.
Since our inception in 2011, our operations have focused on organizing and staffing our company, conducting preclinical studies and clinical trials, business planning, establishing our intellectual property portfolio and raising capital. We do not have any product candidates approved for sale and have not generated any revenue from product sales.
Non-GAAP Financial Measures Non-GAAP net loss, which is defined as net loss attributable to ordinary shareholders for the period after excluding (i) share-based compensation expenses and (ii) accretion of convertible redeemable preferred shares to redemption value, as applicable.
Non-GAAP Financial Measures Non-GAAP net loss, which is defined as net loss attributable to ordinary shareholders for the year after excluding share-based compensation expenses. The Non-GAAP net loss was US$28.5 million for the year ended December 31, 2024, as compared to US$11.7 million for the year ended December 31, 2023.
Foreign exchange gain (loss), net We recorded foreign exchange gain of US$2.6 million and US$1.4 million for the year ended December 31, 2022 and 2023, respectively. This gain of foreign exchange was primarily attributable to the continued appreciation of U.S. dollars against Renminbi which positively impacted our U.S. dollar denominated accounts receivable of Adagene Suzhou.
This loss of foreign exchange in 2024 was primarily attributable to the appreciation of U.S. dollars against global currencies including Renminbi, Australian dollar and Swiss Franc, which negatively impacted our Australian dollar and Swiss Franc denominated receivable accounts of our subsidiaries, offset by the positive impact of our U.S. dollar denominated accounts receivable of Adagene Suzhou.
In 2023, the decrease of approximately 55% reflects clinical focus on and prioritization of the company’s masked, anti-CTLA-4 SAFEbody ADG126. Our research and development expenses may vary substantially from period to period according to the status of our research and development activities.
For the years ended December 31, 2022, 2023 and 2024, our research and development expenses were US$81.3 million, US$36.6 million and US$28.8 million, respectively. The decrease of approximately 55.0% in 2023 and decrease of approximately 21.4% in 2024 reflect continued clinical focus on and prioritization of the company’s masked, anti-CTLA-4 SAFEbody ADG126.
Net cash generated from financing activities was US$145.4 million in 2021, which was mainly attributable to (i) proceeds from initial public offering net of underwriting commissions of US$149.4 million, and (ii) proceeds from borrowings of US$4.4 million, offset by (i) repayment of borrowings of US$5.1 million, (ii) payment of initial public offering costs of US$1.6 million, and (iii) purchase of treasury shares under stock repurchase program of US$2.4 million. 160 Table of Contents Capital Expenditures Our capital expenditures are incurred primarily in connection with research and development equipment.
Financing activities Net cash generated from financing activities was US$3.8 million in 2024, which was mainly attributable to (i) proceeds from borrowings of US$4.9 million, (ii) net proceeds from sale of ADSs of US$7.0 million under the ATM Offering, and (iii) proceeds from share option exercise of US$0.2 million, offset by repayment of borrowings of US$8.3 million.
Removed
Our highly differentiated and wholly-owned clinical-stage pipeline consists of two anti-CTLA-4 antibodies ADG126 (SAFEbody and NEObody) and ADG116 (NEObody), and two anti-CD137 antibodies ADG206 (POWERbody) and ADG106 (NEObody).
Added
Meanwhile, we are prioritizing and focusing on the development of ADG126, which is currently in Phase 1b/2 dose expansion in combination with pembrolizumab in MSS CRC patients. We also have a robust preclinical pipeline of four programs in IND-enabling studies, including masked T cell engagers, as well as over 50 programs in various stages of discovery.
Removed
ADG126, ADG116 and ADG106 are in Phase 1b/2 clinical evaluation in single agent and/or combination clinical trials designed to evaluate safety and preliminary efficacy, while ADG206 is in Phase 1 single agent clinical trial.
Added
Indirect research and development expenses have not been allocated directly to each program, and primarily consist of costs to compensate personnel, overhead and infrastructure costs to maintain our facilities, and other costs related to activities that benefit multiple projects.
Removed
For the years ended December 31, 2021, 2022 and 2023, our research and development expenses were US$68.1 million, US$81.3 million and US$36.6 million, respectively. The increase in 2022 was primarily due to increased research and development activities for our clinical programs and preclinical testing for candidates in the IND-enabling phase.
Added
Share-based compensation We grant restricted shares and stock options to eligible employees and nonemployees and accounts for share-based compensation in accordance with ASC 718, Compensation—Stock Compensation.
Removed
Recent accounting pronouncements A list of recent relevant accounting pronouncements is included in Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included elsewhere in this annual report. 154 Table of Contents Results of Operations The following table summarizes our consolidated results of operations for the periods presented.
Added
Interest and investment income Our interest and investment income was US$3.8 million for the year ended December 31, 2024 as compared to US$4.3 million for the year ended December 31, 2023.
Removed
Our licensing and collaboration revenue in 2023 was recognized due to fulfillment of performance obligations associated with the collaboration and technology licensing agreements with Exelixis and Sanofi to develop antibody-based therapies, respectively. Such revenue also included a milestone payment of US$3.0 million from Exelixis received in 2023.
Added
Foreign exchange gain (loss), net We recorded foreign exchange gain of US$1.4 million for the year ended December 31, 2023 and foreign exchange loss of US$0.9 million for the year ended December 31, 2024, respectively.
Removed
This increase was primarily attributable to an increase in interest rate and increase in the amount of term deposits placed.
Added
During the year ended December 31, 2024, we completed the sale of an aggregate of 2,504,692 ADSs, representing 3,130,862 ordinary shares, through an at-the-market equity offering program (the “ATM Offering”), under which we received net proceeds of approximately US$7.0 million in 2024.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

80 edited+18 added−25 removed92 unchanged
Luo served as the first lead scientist in computational protein design and protein laboratory at Xencor (Nasdaq: XNCR) from July 1998 to August 2000. In September 2000, Dr. Luo founded Abmaxis Inc. and served as its Co-Founder, Chief Technology Officer, president, and director. In May 2006, Dr. Luo led the acquisition of Abmaxis Inc. by Merck & Co.
Dr. Luo served as the first lead scientist in computational protein design and protein laboratory at Xencor (Nasdaq: XNCR) from July 1998 to August 2000. In September 2000, Dr. Luo founded Abmaxis Inc. and served as its Co-Founder, Chief Technology Officer, president, and director. In May 2006, Dr. Luo led the acquisition of Abmaxis Inc. by Merck & Co.
The audit committee is responsible for, among other things: ● reviewing and recommending to our board for approval, the appointment, re-appointment or removal of the independent auditor, after considering its annual performance evaluation of the independent auditor; ● approving the remuneration and terms of engagement of the independent auditor and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors at least annually; 173 Table of Contents ● obtaining a written report from our independent auditor describing matters relating to its independence and quality control procedures; ● reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response; ● discussing with our independent auditor, among other things, the audits of the financial statements, including whether any material information should be disclosed, issues regarding accounting and auditing principles and practices; ● reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; ● reviewing and recommending the semi-annually financial data the annual financial statements to our board for inclusion in our semi-annually earnings releases and annual reports, respectively; ● discussing the annual audited financial statements with management and the independent registered public accounting firm; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures; ● at least annually, reviewing and reassessing the adequacy of the committee charter; ● approving annual audit plans, and undertaking an annual performance evaluation of the internal audit function; ● establishing and overseeing procedures for the handling of complaints and whistleblowing; ● meeting separately and periodically with management and the independent registered public accounting firm; ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and ● reporting regularly to the board.
The audit committee is responsible for, among other things: ● reviewing and recommending to our board for approval, the appointment, re-appointment or removal of the independent auditor, after considering its annual performance evaluation of the independent auditor; ● approving the remuneration and terms of engagement of the independent auditor and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors at least annually; ● obtaining a written report from our independent auditor describing matters relating to its independence and quality control procedures; ● reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response; 181 Table of Contents ● discussing with our independent auditor, among other things, the audits of the financial statements, including whether any material information should be disclosed, issues regarding accounting and auditing principles and practices; ● reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; ● reviewing and recommending the semi-annually financial data the annual financial statements to our board for inclusion in our semi-annually earnings releases and annual reports, respectively; ● discussing the annual audited financial statements with management and the independent registered public accounting firm; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures; ● at least annually, reviewing and reassessing the adequacy of the committee charter; ● approving annual audit plans, and undertaking an annual performance evaluation of the internal audit function; ● establishing and overseeing procedures for the handling of complaints and whistleblowing; ● meeting separately and periodically with management and the independent registered public accounting firm; ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and ● reporting regularly to the board.
The compensation committee is responsible for, among other things: ● overseeing the development and implementation of compensation programs in consultation with our management; ● at least annually, reviewing and approving, or recommending to the board for its approval, the compensation for our executive officers; ● at least annually, reviewing and recommending to the board for determination with respect to the compensation of our non-executive directors; ● at least annually, reviewing periodically and approving any incentive compensation or equity plans, programs or other similar arrangements; ● reviewing executive officer and director indemnification and insurance matters; 174 Table of Contents ● overseeing our regulatory compliance with respect to compensation matters, including our policies on restrictions on compensation plans and loans to directors and executive officers; ● at least annually, reviewing and reassessing the adequacy of the committee charter; ● selecting compensation consultant, legal counsel or other advisor only after taking into consideration all factors relevant to that person’s independence from management; and ● reporting regularly to the board.
The compensation committee is responsible for, among other things: ● overseeing the development and implementation of compensation programs in consultation with our management; ● at least annually, reviewing and approving, or recommending to the board for its approval, the compensation for our executive officers; ● at least annually, reviewing and recommending to the board for determination with respect to the compensation of our non-executive directors; ● at least annually, reviewing periodically and approving any incentive compensation or equity plans, programs or other similar arrangements; ● reviewing executive officer and director indemnification and insurance matters; ● overseeing our regulatory compliance with respect to compensation matters, including our policies on restrictions on compensation plans and loans to directors and executive officers; ● at least annually, reviewing and reassessing the adequacy of the committee charter; 182 Table of Contents ● selecting compensation consultant, legal counsel or other advisor only after taking into consideration all factors relevant to that person’s independence from management; and ● reporting regularly to the board.
On December 14, 2020, Peter Luo, Fangyong (Felix) Du, Ping Ren, Hua Gong, JC Xu, Qinghai Zhao, Man Kin (Raymond) Tam, Xiaohong (Kristine) She, Yu (Albert) Ren, Yan Li, Guizhong Liu and Alexander Goergen entered into a concert party agreement, pursuant to which the parties agree to (i) always be acting in concert in respect of their respective direct or indirect voting rights at our shareholders’ general meetings, (ii) recognize the controlling position of Peter Luo; and (iii) act in concert in accordance with Peter Luo’s opinions in respect of the daily operations and management and the major decision-making of us.
On December 14, 2020, Peter Luo, Fangyong (Felix) Du, Ping Ren, Hua Gong, Qinghai Zhao, Man Kin (Raymond) Tam, Xiaohong (Kristine) She, Yu (Albert) Ren, Yan Li, Guizhong Liu and Alexander Goergen entered into a concert party agreement, pursuant to which the parties agree to (i) always be acting in concert in respect of their respective direct or indirect voting rights at our shareholders’ general meetings, (ii) recognize the controlling position of Peter Luo; and (iii) act in concert in accordance with Peter Luo’s opinions in respect of the daily operations and management and the major decision-making of us.
For the fiscal year ended December 31, 2023, we did not pay any cash compensation to non-executive directors who are not independent directors. For the fiscal year ended December 31, 2023, we did not set aside or accrue expenses related to pension, retirement or other similar benefits to our executive officers and directors.
For the fiscal year ended December 31, 2024, we did not pay any cash compensation to non-executive directors who are not independent directors. For the fiscal year ended December 31, 2024, we did not set aside or accrue expenses related to pension, retirement or other similar benefits to our executive officers and directors.
Peter Luo and Yumeng Wang is not subject to a term of office and holds office until such time as his or her successor takes office or until the earlier of his death, resignation or removal from office pursuant to the applicable provisions of our memorandum and articles of association.
Peter Luo is not subject to a term of office and holds office until such time as his or her successor takes office or until the earlier of his death, resignation or removal from office pursuant to the applicable provisions of our memorandum and articles of association.
She’s spouse is Peter Luo, Ph.D., our Co-Founder, Chief Executive Officer and Chairman of the Board. 165 Table of Contents Guizhong Liu, Ph.D. has served as our Senior Vice President of Early Drug Discovery since October 2023. Dr.
She’s spouse is Peter Luo, Ph.D., our Co-Founder, Chief Executive Officer and Chairman of the Board. Guizhong Liu, Ph.D. has served as our Senior Vice President of Early Drug Discovery since October 2023. Dr.
He received his bachelor’s degree in civil & resources engineering from the University of Auckland in 1997, master’s degree in practising accounting from Monash University in 2001 and an Executive Master of Business Administration degree from the University of Western Ontario in 2005. Chunfang (Vicky) Gu, M.B.A. joined Adagene in September 2017 and serves as Senior Director of Finance.
He received his bachelor’s degree in civil & resources engineering from the University of Auckland in 1997, master’s degree in practising accounting from Monash University in 2001 and an Executive Master of Business Administration degree from the University of Western Ontario in 2005. 172 Table of Contents Chunfang (Vicky) Gu, M.B.A. joined Adagene in September 2017 and serves as Executive Director of Finance.
(6) Represents 4,982,740 ordinary shares in the form of ADSs that were held of record by WuXi PharmaTech Healthcare Fund I L.P., a limited partnership incorporated in the Cayman Islands. WuXi Pharmatech Healthcare Fund I L.P. is an indirect wholly owned subsidiary of WuXi AppTec Co., Ltd (SSE: 603259; SEHK: 2359).
(6) Represents 4,978,628 ordinary shares in the form of ADSs that were held of record by WuXi PharmaTech Healthcare Fund I L.P., a limited partnership incorporated in the Cayman Islands. WuXi Pharmatech Healthcare Fund I L.P. is an indirect wholly owned subsidiary of WuXi AppTec Co., Ltd (SSE: 603259; SEHK: 2359).
However, the plan administrator will retain its authority until all outstanding awards are exercised or terminated. 171 Table of Contents The following table summarizes, as of February 29, 2024, the number of ordinary shares under outstanding awards that we granted to our directors and executive officers under the 2019 Plan, which replaced the 2015 Plan, and under the 2021 Plan, excluding awards that were exercised, forfeited or canceled after the relevant grant dates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary ​ ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ ​ ​ ​ ​ ​ Underlying ​ Exercise ​ ​ ​ ​ ​ ​ Equity Awards ​ Price ​ ​ ​ ​ Name ​ Granted ​ (US$/Share) ​ Date of Grant ​ Date of Expiration Executive Officers ​ Peter Luo, Ph.
However, the plan administrator will retain its authority until all outstanding awards are exercised or terminated. 179 Table of Contents The following table summarizes, as of February 28, 2025, the number of ordinary shares under outstanding awards that we granted to our directors and executive officers under the 2019 Plan, which replaced the 2015 Plan, and under the 2021 Plan, excluding awards that were exercised, forfeited or canceled after the relevant grant dates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary ​ ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ ​ ​ ​ ​ ​ Underlying ​ Exercise ​ ​ ​ ​ ​ ​ Equity Awards ​ Price ​ ​ ​ ​ Name ​ Granted ​ (US$/Share) ​ Date of Grant ​ Date of Expiration Executive Officers ​ Peter Luo, Ph.
Employees, officers, directors and consultants that provide services to us or one of our subsidiaries may be selected to receive awards under the 2021 Plan. Our board of directors or a committee appointed by the board administers the 2021 Plan.
Employees, officers, directors and consultants that provide services to us or one of our subsidiaries may be selected to receive awards under the 2021 Plan. 177 Table of Contents Our board of directors or a committee appointed by the board administers the 2021 Plan.
Executive Officers Position/Title Peter Luo, Ph.D ​ Co-Founder, Chief Executive Officer, President of R&D, and Chairman of the Board JC Xu, M.D., Ph.D ​ Chief Scientific Officer Qinghai Zhao, Ph.D ​ Chief Manufacturing Officer Man Kin (Raymond) Tam, M.B.A., B.
Executive Officers Position/Title Peter Luo, Ph.D ​ Co-Founder, Chief Executive Officer, President of R&D, and Chairman of the Board Qinghai Zhao, Ph.D ​ Chief Manufacturing Officer Man Kin (Raymond) Tam, M.B.A., B.
The plan administrator has broad authority to: ● select participants and determine the types of awards that they are to receive; ● determine the number of shares that are to be subject to awards and the terms and conditions of awards, including the price (if any) to be paid for the shares or the award and establish the vesting conditions (if applicable) of such shares or awards; ● cancel, modify or waive our rights with respect to, or modify, discontinue, suspend or terminate any or all outstanding awards, subject to any required consents; ● construe and interpret the terms of the 2021 Plan and any agreements relating to the plan; ● accelerate or extend the vesting or exercisability or extend the term of any or all outstanding awards subject to any required consent; ● subject to the other provisions of the 2021 Plan, make certain adjustments to one or more outstanding awards (including a repricing of the exercise or base price of any outstanding option or share appreciation right without shareholder approval) and authorize the termination, conversion, substitution or succession of awards; and ● allow the purchase price of an award or our ordinary shares to be paid in the form of cash, check or electronic funds transfer, by the delivery of previously-owned ordinary shares or by a reduction of the number of shares deliverable pursuant to the award, by services rendered by the recipient of the award, by notice and third party payment or cashless exercise on such terms as the plan administrator may authorize or any other form permitted by law. 170 Table of Contents A total of 2,994,000 of our ordinary shares was authorized for issuance with respect to awards granted under the 2021 Plan.
The plan administrator has broad authority to: ● select participants and determine the types of awards that they are to receive; ● determine the number of shares that are to be subject to awards and the terms and conditions of awards, including the price (if any) to be paid for the shares or the award and establish the vesting conditions (if applicable) of such shares or awards; ● cancel, modify or waive our rights with respect to, or modify, discontinue, suspend or terminate any or all outstanding awards, subject to any required consents; ● construe and interpret the terms of the 2021 Plan and any agreements relating to the plan; ● accelerate or extend the vesting or exercisability or extend the term of any or all outstanding awards subject to any required consent; ● subject to the other provisions of the 2021 Plan, make certain adjustments to one or more outstanding awards (including a repricing of the exercise or base price of any outstanding option or share appreciation right without shareholder approval) and authorize the termination, conversion, substitution or succession of awards; and ● allow the purchase price of an award or our ordinary shares to be paid in the form of cash, check or electronic funds transfer, by the delivery of previously-owned ordinary shares or by a reduction of the number of shares deliverable pursuant to the award, by services rendered by the recipient of the award, by notice and third party payment or cashless exercise on such terms as the plan administrator may authorize or any other form permitted by law.
Each award under the 2019 Plan shall be evidenced by an award agreement in the form approved by the plan administrators. The terms of the award agreements will be determined by the plan administrators and consistent with the terms of the 2019 Plan. 169 Table of Contents Conditions of Award.
Each award under the 2019 Plan shall be evidenced by an award agreement in the form approved by the plan administrators. The terms of the award agreements will be determined by the plan administrators and consistent with the terms of the 2019 Plan. Conditions of Award.
Do was also a senior partner at McKinsey & Company, where he spent 17 years helping to build the healthcare, high technology, and corporate finance practices. He holds a BA from Dartmouth College and an MBA from the Tuck School of Business at Dartmouth. Mervyn Turner, Ph.D. , has served as our independent director since April 2023. Dr.
Do was also a senior partner at McKinsey & Company, where he spent 17 years helping to build the healthcare, high technology, and corporate finance practices. He holds a BA from Dartmouth College and an MBA from the Tuck School of Business at Dartmouth. Li Zhu, Ph.D. , has served as our independent director since August 2023. Dr.
We have terminated the authority to grant additional awards under the 2019 Plan and all future awards will be granted under the 2021 Plan. Therefore, the effective maximum number of shares issuable under the 2019 Plan is 9,970,732.
We have terminated the authority to grant additional awards under the 2019 Plan and all future awards will be granted under the 2021 Plan. Therefore, the effective maximum number of shares issuable under the 2019 Plan is 9,423,435.
The following paragraphs summarize the principal terms of the 2019 Plan. Types of Awards. The 2019 Plan permits the awards of options, share appreciation rights, ordinary shares or restricted shares. Plan Administration.
The following paragraphs summarize the principal terms of the 2019 Plan. Types of Awards. The 2019 Plan permits the awards of options, share appreciation rights, ordinary shares or restricted shares. 176 Table of Contents Plan Administration.
Gallen, School of Business in Switzerland. 6.B. Compensation Compensation For the fiscal year ended December 31, 2023, we paid an aggregate of US$2.6 million in cash to our executive officers and an aggregate of US$0.3 million in cash to our independent directors.
Gallen, School of Business in Switzerland. ​ 175 Table of Contents 6.B. Compensation Compensation For the fiscal year ended December 31, 2024, we paid an aggregate of US$2.0 million in cash to our executive officers and an aggregate of US$0.3 million in cash to our independent directors.
Employees We had a total of 259, 248 and 174 employees as of December 31, 2021, 2022 and 2023, respectively. The following table sets forth the numbers of our employees categorized by function as of December 31, 2023.
Employees We had a total of 248, 174 and 138 employees as of December 31, 2022, 2023 and 2024, respectively. The following table sets forth the numbers of our employees categorized by function as of December 31, 2024.
The functions and powers of our board of directors include, among others, (i) convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings, (ii) declaring dividends, (iii) appointing officers and determining their terms of offices and responsibilities, (iv) exercising the borrowing powers of our company, and (v) approving the transfer of shares of our company, including the registering of such shares in our share register.
The functions and powers of our board of directors include, among others, (i) convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings, (ii) declaring dividends, (iii) appointing officers and determining their terms of offices and responsibilities, (iv) exercising the borrowing powers of our company, and (v) approving the transfer of shares of our company, including the registering of such shares in our share register. 183 Table of Contents Terms of Directors and Officers Our officers are elected by and serve at the discretion of the board of directors.
Cheung was deputy area managing partner of Ernst & Young (“EY”) in Asia Pacific overseeing the business operations, finance, information technology and risk management functions from July 2018 to June 2020. Mr. Cheung was the assurance leader for EY in Greater China from July 2013 to June 2018. Mr.
Mr. Cheung has many years of auditing and accounting professional experience. Mr. Cheung was deputy area managing partner of Ernst & Young (“EY”) in Asia Pacific overseeing the business operations, finance, information technology and risk management functions from July 2018 to June 2020. Mr. Cheung was the assurance leader for EY in Greater China from July 2013 to June 2018.
Share Ownership The following table sets forth information concerning the beneficial ownership of our ordinary shares, as of February 29, 2024, by: ● each of our directors and executive officers; and 177 Table of Contents ● each person known to us to beneficially own more than 5% of our ordinary shares.
Share Ownership The following table sets forth information concerning the beneficial ownership of our ordinary shares, as of February 28, 2025, by: ● each of our directors and executive officers; and ● each person known to us to beneficially own more than 5% of our ordinary shares.
D. 287,415 ​ $ 13.85 January 2021 January 2031 Peter Luo, Ph. D. ​ 500,000 ​ $ 5.6 ​ February 2022 ​ February 2032 Peter Luo, Ph. D. ​ 372,819 ​ $ 1.06 ​ December 2022 ​ December 2032 Peter Luo, Ph. D. ​ 500,000 ​ $ 1.04 ​ May 2023 ​ May 2033 Peter Luo, Ph.
D. 287,415 ​ $ 13.85 January 2021 January 2031 Peter Luo, Ph. D. ​ 50,000 ​ $ 5.6 ​ February 2022 ​ February 2032 Peter Luo, Ph. D. ​ 500,000 ​ $ 1.04 ​ May 2023 ​ May 2033 Peter Luo, Ph. D. ​ 500,000 ​ $ 1.33 ​ December 2023 ​ December 2033 Peter Luo, Ph.
Dr. Hua Gong, Yu (Albert) Ren and Fangyong (Felix) Du are no longer subject to the concert party agreement due to their departure from us. (3) Represents 5,340,742 ordinary shares, consisting of (i) 4,828,242 ordinary shares and (ii) 512,500 ordinary shares in the form of ADSs, are held of record by JSR Limited, a British Virgin Islands company.
Dr. JC Xu, Hua Gong, Yu (Albert) Ren and Fangyong (Felix) Du are no longer subject to the concert party agreement due to their departure from us. (3) Represents 5,340,740 ordinary shares, consisting of (i) 4,203,242 ordinary shares and (ii) 1,137,498 ordinary shares in the form of ADSs, are held of record by JSR Limited, a British Virgin Islands company.
Cuong Do has served as our independent director since November 2022. Mr. Do is President and CEO of BioVie Inc., a clinical-stage company developing innovative therapies for Alzheimer’s Disease, Parkinson’s disease and refractory Ascites. Prior to BioVie, Mr.
Cheung is a member of Hong Kong Institute of Certified Public Accountants. Cuong Do has served as our independent director since November 2022. Mr. Do is President and CEO of BioVie Inc., a clinical-stage company developing innovative therapies for Alzheimer’s Disease, Parkinson’s disease and refractory Ascites. Prior to BioVie, Mr.
Luo also completed his postdoctoral research in protein folding at Stanford University in 1998. Dr. Luo’s spouse is Xiaohong (Kristine) She who is our Senior Vice President, Head of Clinical Operations. JC Xu, M.D., Ph.D. has served as our Chief Scientific Officer since August 2020. Dr.
Luo also completed his postdoctoral research in protein folding at Stanford University in 1998. Dr. Luo’s spouse is Xiaohong (Kristine) She who is our Senior Vice President, Head of Clinical Operations. Qinghai Zhao, Ph.D. has served as our Chief Manufacturing Officer since October 2020. Dr.
The nominating and corporate governance committee is responsible for, among other things: ● recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience, expertise, diversity and availability of service to us; ● developing and recommending to our board such policies and procedures with respect to nomination or appointment of members of our board and chairs and members of its committees or other corporate governance matters as may be required pursuant to any SEC or Nasdaq rules, or otherwise considered desirable and appropriate; ● selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself; ● at least annually, reviewing and reassessing the adequacy of the committee charter; ● developing and reviewing at least annually the corporate governance principles adopted by the board and advising the board with respect to significant developments in the law and practice of corporate governance and our compliance with such laws and practices; and ● evaluating the performance and effectiveness of the board as a whole. 175 Table of Contents Duties and Functions of Directors Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests.
The nominating and corporate governance committee is responsible for, among other things: ● recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience, expertise, diversity and availability of service to us; ● developing and recommending to our board such policies and procedures with respect to nomination or appointment of members of our board and chairs and members of its committees or other corporate governance matters as may be required pursuant to any SEC or Nasdaq rules, or otherwise considered desirable and appropriate; ● selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself; ● at least annually, reviewing and reassessing the adequacy of the committee charter; ● developing and reviewing at least annually the corporate governance principles adopted by the board and advising the board with respect to significant developments in the law and practice of corporate governance and our compliance with such laws and practices; and ● evaluating the performance and effectiveness of the board as a whole.
Terms of Directors and Officers Our officers are elected by and serve at the discretion of the board of directors. Most of our directors, including directors Andy (Yiu Leung) Cheung, Man Kin (Raymond) Tam, Cuong Do, Mervyn Turner, Li Zhu and Ulf Grawunder, have fixed term of office and are subject to re-appointment by the board of directors.
Most of our directors, including directors Andy (Yiu Leung) Cheung, Man Kin (Raymond) Tam, Cuong Do, Li Zhu and Ulf Grawunder, have fixed term of office and are subject to re-appointment by the board of directors.
As is customary in incentive plans of this nature, the number and type of shares available under the 2021 Plan and any outstanding awards, as well as the exercise or purchase prices of awards, will be subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, share splits, share dividends or other similar events that change the number or kind of shares outstanding, and extraordinary dividends or distributions of property to the shareholders.
The plan administrator may provide for the deferred payment of awards and may determine the terms applicable to deferrals. 178 Table of Contents As is customary in incentive plans of this nature, the number and type of shares available under the 2021 Plan and any outstanding awards, as well as the exercise or purchase prices of awards, will be subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, share splits, share dividends or other similar events that change the number or kind of shares outstanding, and extraordinary dividends or distributions of property to the shareholders.
In addition, the performance milestones applicable to the share options that remain outstanding were also modified. As of February 29, 2024, we had granted equity awards representing 6,229,557 ordinary shares under the 2021 Plan, excluding awards that were forfeited, cancelled or exercised after the relevant grant dates.
In addition, the performance milestones applicable to the share options that remain outstanding were also modified. As of February 28, 2025, we had granted equity awards representing 8,795,907 ordinary shares under the 2021 Plan, excluding awards that were forfeited, cancelled or exercised after the relevant grant dates.
Our directors must also exercise their powers only for a proper purpose. Our directors also owe to our company a duty to exercise the skill they actually possess and such care and diligence that a reasonable prudent person would exercise in comparable circumstances.
Our directors also owe to our company a duty to exercise the skill they actually possess and such care and diligence that a reasonable prudent person would exercise in comparable circumstances.
As of February 29, 2024, the aggregate number of our ordinary shares underlying our outstanding awards under the 2019 Plan is 2,538,070, excluding awards that were forfeited, cancelled or exercised after the relevant grant dates. The term of the awards will expire not more than ten years after the date of grant.
As of February 28, 2025, the aggregate number of our ordinary shares underlying our outstanding awards under the 2019 Plan is 1,922,960, excluding awards that were forfeited, cancelled or exercised after the relevant grant dates. The term of the awards will expire not more than ten years after the date of grant.
As of February 29, 2024, 6,936,060 ordinary shares authorized under the 2021 Plan is available for award purposes. Such number includes an annual automatic increase in an amount equal to 5% of the total number of outstanding ordinary shares on December 31, 2023.
As of February 28, 2025, 9,707,945 ordinary shares authorized under the 2021 Plan is available for award purposes. Such number includes an annual automatic increase in an amount equal to 5% of the total number of outstanding ordinary shares on December 31, 2024.
Cheung has served as an independent non-executive director of JW (Cayman) Therapeutics Co. Ltd (HKEX:2126) since October 2020 and an independent non-executive director of Hua Medicine (HKEX:2552) since January 2023 and an independent non-executive director of CanSino Biologics Inc. (HKEX: 6185, SSE: 688185) since February 2024. Mr.
Mr. Cheung has served as an independent non-executive director of Hua Medicine (HKEX:2552) since January 2023, an independent non-executive director of CanSino Biologics Inc. (HKEX:6185, SSE STAR MARKET:688185) since February 2024 and as an independent non-executive director of GenScript Biotech Corporation (HKEX:1548) since April 2024. Mr. Cheung served as an independent director of JW (Cayman) Therapeutics Co. Ltd.
Yan Li confirmed that she has no disagreement with the Board and remain as a key employee of the Company. 176 Table of Contents Interested Transactions A director may, subject to any separate requirement for audit and risk committee approval under applicable law or applicable Nasdaq listing rules, vote in respect of any contract or transaction in which he or she is interested, provided that the nature of the interest of any directors in such contract or transaction is disclosed by him or her at or prior to its consideration and any vote in that matter. ​ 6.D.
Interested Transactions A director may, subject to any separate requirement for audit and risk committee approval under applicable law or applicable Nasdaq listing rules, vote in respect of any contract or transaction in which he or she is interested, provided that the nature of the interest of any directors in such contract or transaction is disclosed by him or her at or prior to its consideration and any vote in that matter. ​ 6.D.
An executive officer may terminate his or her employment at any time by giving a prior written notice. 168 Table of Contents Each executive officer has agreed to hold, unless expressly consented to by us, at all times during and after the termination of his or her employment agreement, in strict confidence and not to use, any of our confidential information or the confidential information of our customers and suppliers.
Each executive officer has agreed to hold, unless expressly consented to by us, at all times during and after the termination of his or her employment agreement, in strict confidence and not to use, any of our confidential information or the confidential information of our customers and suppliers.
Eng. ​ 40,000 ​ $ 1.33 ​ December 2023 ​ December 2033 Chunfang (Vicky) Gu ​ * ​ $ 1.33 ​ February 2019 ​ February 2029 Chunfang (Vicky) Gu ​ * ​ $ 1.48 ​ March 2020 ​ March 2030 Chunfang (Vicky) Gu ​ * ​ $ 1.83 ​ August 2020 ​ August 2030 Chunfang (Vicky) Gu ​ * ​ $ 5.6 ​ February 2022 ​ February 2032 Chunfang (Vicky) Gu ​ * ​ $ 1.06 ​ December 2022 ​ December 2032 Chunfang (Vicky) Gu ​ * ​ $ 1.04 ​ May 2023 ​ May 2033 Chunfang (Vicky) Gu ​ * ​ $ 1.33 ​ December 2023 ​ December 2033 Ling (Jolin) Zhou ​ * ​ $ 1.48 ​ March 2020 ​ March 2030 Ling (Jolin) Zhou ​ * ​ $ 1.83 ​ August 2020 ​ August 2030 Ling (Jolin) Zhou ​ * ​ $ 5.6 ​ February 2022 ​ February 2032 Ling (Jolin) Zhou ​ * ​ $ 1.06 ​ December 2022 ​ December 2032 Ling (Jolin) Zhou ​ * ​ $ 1.04 ​ May 2023 ​ May 2033 Ling (Jolin) Zhou ​ * ​ $ 1.33 ​ December 2023 ​ December 2033 Yan Li ​ * ​ $ 13.85 ​ January 2021 ​ January 2031 Yan Li ​ * ​ $ 5.60 ​ February 2022 ​ February 2032 Yan Li ​ * ​ $ 1.06 ​ December 2022 ​ December 2032 Yan Li ​ * ​ $ 1.05 ​ May 2023 ​ May 2033 Yan Li ​ * ​ $ 1.33 ​ December 2023 ​ December 2033 Non-Employee Directors ​ ​ ​ Yumeng Wang — ​ — — — Andy (Yiu Leung) Cheung * ​ $ 11.2 June 2021 June 2031 Min Li * ​ $ 11.2 June 2021 June 2031 Min Li ​ * ​ $ 0.94 ​ June 2023 ​ June 2033 Cuong Do ​ * ​ $ 0.8 ​ November 2022 ​ November 2032 Cuong Do ​ * ​ $ 1.07 ​ October 2023 ​ October 2033 Mervyn Turner ​ * ​ $ 1.33 ​ November 2018 ​ November 2028 Mervyn Turner ​ * ​ $ 1.06 ​ May 2023 ​ May 2033 Li Zhu ​ * ​ $ 1.15 ​ September 2023 ​ September 2033 All directors and executive officers as a group 4,672,222 ​ ​ Various dates from November 2018 to December 2023 Various dates from November 2028 to December 2033 Note: * The shares held by each of these directors and executive officers represent less than 1% of our total outstanding shares.
Eng. ​ 50,000 ​ $ 1.55 ​ December 2024 ​ December 2034 Chunfang (Vicky) Gu ​ * ​ $ 1.33 ​ February 2019 ​ February 2029 Chunfang (Vicky) Gu ​ * ​ $ 1.48 ​ March 2020 ​ March 2030 Chunfang (Vicky) Gu ​ * ​ $ 1.83 ​ August 2020 ​ August 2030 Chunfang (Vicky) Gu ​ * ​ $ 5.6 ​ February 2022 ​ February 2032 Chunfang (Vicky) Gu ​ * ​ $ 1.04 ​ May 2023 ​ May 2033 Chunfang (Vicky) Gu ​ * ​ $ 1.33 ​ December 2023 ​ December 2033 Chunfang (Vicky) Gu ​ * ​ $ — ​ July 2024 ​ — Chunfang (Vicky) Gu ​ * ​ $ 1.73 ​ November 2024 ​ November 2034 Chunfang (Vicky) Gu ​ * ​ $ 1.55 ​ December 2024 ​ December 2034 Ling (Jolin) Zhou ​ * ​ $ 1.48 ​ March 2020 ​ March 2030 Ling (Jolin) Zhou ​ * ​ $ 1.83 ​ August 2020 ​ August 2030 Ling (Jolin) Zhou ​ * ​ $ 5.6 ​ February 2022 ​ February 2032 Ling (Jolin) Zhou ​ * ​ $ 1.04 ​ May 2023 ​ May 2033 Ling (Jolin) Zhou ​ * ​ $ 1.33 ​ December 2023 ​ December 2033 Ling (Jolin) Zhou ​ * ​ $ — ​ July 2024 ​ — Ling (Jolin) Zhou ​ * ​ $ 1.73 ​ November 2024 ​ November 2034 Ling (Jolin) Zhou ​ * ​ $ 1.55 ​ December 2024 ​ December 2034 Non-Employee Directors ​ ​ ​ Andy (Yiu Leung) Cheung ​ * ​ $ 11.2 ​ June 2021 ​ June 2031 Andy (Yiu Leung) Cheung * ​ $ 1.55 December 2024 December 2034 Cuong Do ​ * ​ $ 0.8 ​ November 2022 ​ November 2032 Cuong Do ​ * ​ $ 1.07 ​ October 2023 ​ October 2033 Li Zhu ​ * ​ $ 1.15 ​ September 2023 ​ September 2033 Li Zhu ​ * ​ $ 1.55 ​ December 2024 ​ December 2034 Ulf Grawunder ​ * ​ $ 2.26 ​ April 2024 ​ April 2034 All directors and executive officers as a group 4,512,730 ​ ​ Various dates from November 2018 to December 2024 Various dates from November 2028 to December 2034 Note: * The shares held by each of these directors and executive officers represent less than 1% of our total outstanding shares.
(“GASF”), which is controlled by General Atlantic Singapore Interholdco Ltd. (“GAS Interholdco”) The members of GAS Interholdco that share beneficial ownership of the ordinary shares and ADSs held of record by GA AI are the GA Funds.
(“GAS Interholdco”) The members of GAS Interholdco that share beneficial ownership of the ordinary shares and ADSs held of record by GA AI are the GA Funds.
Eng. ​ Chief Financial Officer and Director Chunfang (Vicky) Gu M.B.A ​ Senior Director of Finance Ling (Jolin) Zhou ​ Executive Director of Human Resources ​ 163 Table of Contents Key Employees Position/Title Yan Li, M.B.A. ​ Senior Vice President, Bioinformatics and Information Technology and Director* Xiaohong (Kristine) She ​ Senior Vice President, Head of Clinical Operations Guizhong Liu, Ph.D. ​ Senior Vice President of Early Drug Discovery Alexander Goergen ​ Vice President, Head of Business Development Songmao Zheng, Ph.D. ​ Vice President, Head of Clinical and Quantitative Pharmacology Jiping Zha ​ Executive Vice President of Clinical Development Wenlin Zeng ​ Vice President of Early Stage CMC Ami Knoefler ​ Vice President of Investor Relations and Corporate Communications Dana Hu-Lowe ​ Vice President of Global Product Team Leadership ​ Non-Employee Directors Position/Title Yumeng Wang ​ Director Andy (Yiu Leung) Cheung ​ Independent Director Cuong Do ​ Independent Director Mervyn Turner, Ph.D. ​ Independent Director Li Zhu, Ph.D. ​ Independent Director Ulf Grawunder, Ph.D. ​ Independent Director * Ms.
Eng. ​ Chief Financial Officer and Director Chunfang (Vicky) Gu M.B.A ​ Executive Director of Finance Ling (Jolin) Zhou ​ Executive Director of Human Resources ​ 171 Table of Contents Key Employees Position/Title Yan Li, M.B.A. ​ Senior Vice President, Bioinformatics and Information Technology Xiaohong (Kristine) She ​ Senior Vice President, Head of Clinical Operations Guizhong Liu, Ph.D. ​ Senior Vice President of Early Drug Discovery Alexander Goergen ​ Vice President, Head of Business Development Songmao Zheng, Ph.D. ​ Vice President, Head of Clinical and Quantitative Pharmacology Jiping Zha ​ Executive Vice President of Clinical Development Wenlin Zeng ​ Vice President of Early Stage CMC Dana Hu-Lowe ​ Vice President of Global Product Team Leadership ​ Non-Employee Directors Position/Title Andy (Yiu Leung) Cheung ​ Independent Director Cuong Do ​ Independent Director Li Zhu, Ph.D. ​ Independent Director Ulf Grawunder, Ph.D. ​ Independent Director ​ Executive Officers Peter Luo, Ph.D. is our Co-Founder and has served as our Chief Executive Officer since November 2011 and Chairman of the Board of the Directors since February 2018.
Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. 179 Table of Contents (7) Represents 4,452,441 ordinary shares and 264,000 ADSs representing 330,000 ordinary shares held by General Atlantic Singapore AI Pte. Ltd. (“GA AI”), a company incorporated under the laws of Singapore. GA AI is wholly-owned by General Atlantic Singapore Fund Pte. Ltd.
Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. 187 Table of Contents (7) Represents 3,825,952 ADSs representing 4,782,440 ordinary shares held by General Atlantic Singapore AI Pte. Ltd. (“GA AI”), a company incorporated under the laws of Singapore. GA AI is wholly-owned by General Atlantic Singapore Fund Pte. Ltd. (“GASF”), which is controlled by General Atlantic Singapore Interholdco Ltd.
Zhu founded Genetastix Corporation, Inc., a biotech company focused on yeast-based antibody discovery, and served as president and chief executive officer from May 2000 to December 2005. Dr.
Zhu worked at California-based Clontech Laboratories, Inc. as a director of molecular biology from January 1990 to March 2000. Dr. Zhu founded Genetastix Corporation, Inc., a biotech company focused on yeast-based antibody discovery, and served as president and chief executive officer from May 2000 to December 2005. Dr.
Cheung received his bachelor’s degree in accounting and finance from the University of Lancaster in the United Kingdom in July 1982. He obtained a master’s degree in accounting and finance from London School of Economics and Political Science in the United Kingdom in August 1983. Mr. Cheung is a member of Hong Kong Institute of Certified Public Accountants.
(HKEX:2126) between October 2020 and August 2024. Mr. Cheung received his bachelor’s degree in accounting and finance from the University of Lancaster in the United Kingdom in July 1982. He obtained a master’s degree in accounting and finance from London School of Economics and Political Science in the United Kingdom in August 1983. Mr.
As of February 29, 2024, a total of 33,681,015 ordinary shares, representing 61.0% of our outstanding ordinary shares, including ordinary shares issued in advance but deemed not outstanding to facilitiate conversation of ordinary shares to ADSs for the employee share incentive plans, are held by one record holder in the United States.
As of February 28, 2025, a total of 12,786,716 ordinary shares, representing 21.7% of our outstanding ordinary shares, including ordinary shares issued in advance but deemed not outstanding to facilitate conversation of ordinary shares to ADSs for the employee share incentive plans, are held by one record holder in the United States.
We also engage consultants and part-time staff as and when appropriate. ​ ​ ​ ​ ​ ​ Number of Function ​ Employees Research and Development ​ 118 Computational Biology and Informatics 16 ​ ​ Technology Development 40 ​ ​ Drug Discovery 29 ​ ​ Clinical Development 25 ​ ​ CMC Development ​ 8 ​ ​ General Administration ​ ​ 53 HR 5 ​ ​ Finance 14 ​ ​ IT 16 ​ ​ Administration 18 ​ ​ Business Development and Marketing ​ ​ 3 Total ​ ​ 174 ​ Our success depends on our ability to attract, motivate, train and retain qualified personnel.
We also engage consultants and part-time staff as and when appropriate. ​ ​ ​ ​ ​ Function Number of Employees Research and Development ​ 94 Computational Biology and Informatics 14 ​ ​ Early Drug Discovery & Technology Development ​ 36 ​ ​ Clinical Development 27 ​ ​ CMC Development ​ 17 ​ ​ General Administration ​ ​ 42 HR 4 ​ ​ Finance 11 ​ ​ IT 14 ​ ​ Administration 13 ​ ​ Business Development and Marketing ​ ​ 2 Total ​ ​ 138 ​ Our success depends on our ability to attract, motivate, train and retain qualified personnel.
Ltd.(7) 4,782,441 8.7 % Panacea Venture Healthcare Fund II, L.P.(8) ​ 2,750,000 ​ 5.0 % HAN 2020 IRREVOCABLE TRUST(9) ​ 6,000,000 ​ 10.9 % Notes: * For each person and group included in this table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of (i) 55,196,230 being the number of ordinary shares as of February 29, 2024 and (ii) the number of ordinary shares underlying share options held by such person or group that are exercisable within 60 days after February 29, 2024. ** Represents beneficial ownership of less than one percent. † The business address of our directors and executive officers, except for Cuong Do, Yumeng Wang, Mervyn Turner and Li Zhu, is 4F, Building C14, No. 218, Xinghu Street, Suzhou Industrial Park Suzhou, Jiangsu Province, 215123, People’s Republic of China.
(8) ​ 3,037,500 ​ 5.2 % HAN 2020 IRREVOCABLE TRUST (9) ​ 9,175,439 ​ 15.6 % OT Healthcare Fund I, LLC (10) ​ 4,459,566 ​ 7.6 % Red Beard Holdings and its Affiliated Entities (11) ​ 3,833,806 ​ 6.5 % Notes: * For each person and group included in this table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of (i) 58,886,944 being the number of ordinary shares as of February 28, 2025 and (ii) the number of ordinary shares underlying share options held by such person or group that are exercisable within 60 days after February 28, 2025. ** Represents beneficial ownership of less than one percent. † The business address of our directors and executive officers, except for Cuong Do, and Li Zhu, is 4F, Building C14, No. 218, Xinghu Street, Suzhou Industrial Park Suzhou, Jiangsu Province, 215123, People’s Republic of China.
D. ​ * ​ $ 1.04 ​ May 2023 ​ May 2033 Qinghai Zhao, Ph. D. ​ * ​ $ 1.33 ​ December 2023 ​ December 2033 Man Kin (Raymond) Tam, M.B.A., B. Eng. 138,519 ​ $ 1.48 March 2020 March 2030 Man Kin (Raymond) Tam, M.B.A., B.
D. ​ * ​ $ 1.73 ​ November 2024 ​ November 2034 Qinghai Zhao, Ph. D. ​ * ​ $ 1.55 ​ December 2024 ​ December 2034 Man Kin (Raymond) Tam, M.B.A., B. Eng. 138,519 ​ $ 1.48 March 2020 March 2030 Man Kin (Raymond) Tam, M.B.A., B.
Hu-Lowe received her bachelor’s dgreee in chemistry from Beijing Normal University in 1984 and Ph.D. degree in biochemistry from the University of Mississippi in 1992 and completed her Post-doctoral training at Scripps Research Institute and the Burnham Cancer Center (now the Sanford Burnham Prebys Medical Discovery Institute).
Hu-Lowe received her bachelor’s degree in chemistry from Beijing Normal University in 1984 and Ph.D. degree in biochemistry from the University of Mississippi in 1992 and completed her Post-doctoral training at Scripps Research Institute and the Burnham Cancer Center (now the Sanford Burnham Prebys Medical Discovery Institute). 174 Table of Contents Non-Employee Directors Andy (Yiu Leung) Cheung has served as our independent director since February 2021.
Zheng received his bachelor’s degree in biological sciences from Sichuan University in 2007 and Ph.D. degree in pharmaceutical sciences from University of Washington in 2012. Jiping Zha, Ph.D. has served as our Executive Vice President of Clinical Development since September 2021. Dr. Zha is responsible for clinical development, clinical operation and drug safety group.
Zheng had served as Scientific Director/Group Leader, leading numerous biologics programs at Janssen BioTherapeutics, Janssen R&D since 2013. Dr. Zheng received his bachelor’s degree in biological sciences from Sichuan University in 2007 and Ph.D. degree in pharmaceutical sciences from University of Washington in 2012. Jiping Zha, Ph.D. has served as our Executive Vice President of Clinical Development since September 2021.
Eng. 315,308 ​ $ 1.83 August 2020 August 2030 Man Kin (Raymond) Tam, M.B.A., B. Eng. ​ 12,026 ​ $ 1.06 ​ December 2022 ​ December 2032 Man Kin (Raymond) Tam, M.B.A., B. Eng. ​ 50,000 ​ $ 1.04 ​ May 2023 ​ May 2033 Man Kin (Raymond) Tam, M.B.A., B.
Eng. 74,886 ​ $ 1.83 August 2020 August 2030 Man Kin (Raymond) Tam, M.B.A., B. Eng. ​ 50,000 ​ $ 1.04 ​ May 2023 ​ May 2033 Man Kin (Raymond) Tam, M.B.A., B. Eng. ​ 40,000 ​ $ 1.33 ​ December 2023 ​ December 2033 Man Kin (Raymond) Tam, M.B.A., B.
Zeng was the senior director of upstream process development responsible for both early and late stage programs at Gilead Sciences, Inc from July 2020 to June 2021 .
Zeng brings more than 20 years of experience in drug discovery and drug development in the biopharmaceutical industry. Prior to joining us, Dr. Zeng was the senior director of upstream process development responsible for both early and late stage programs at Gilead Sciences, Inc from July 2020 to June 2021 .
Liu received his bachelor’s degree in biology in 1992 and master’s degree in cell biology in 1995 from Beijing Normal University and Ph.D. degree in cell biology from Peking Union Medical College in 1998. He also completed his postdoctoral training in cancer biology at Mount Sinai School of Medicine in 2004.
Liu received his bachelor’s degree in biology in 1992 and master’s degree in cell biology in 1995 from Beijing Normal University and Ph.D. degree in cell biology from Peking Union Medical College in 1998.
These and other awards may also be issued solely or in part for services. Awards are generally paid in cash or our ordinary shares. The plan administrator may provide for the deferred payment of awards and may determine the terms applicable to deferrals.
These and other awards may also be issued solely or in part for services. Awards are generally paid in cash or our ordinary shares.
JSR Limited is controlled by GP Healthcare Capital Co., Ltd. The registered address of JSR Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. Information set forth above is based upon JSR Limited’s Schedule 13G/A filing with the SEC on February 6, 2023.
JSR Limited is controlled by GP Healthcare Capital Co., Ltd. The registered address of JSR Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found by our company to be of unsound mind; (iii) resigns by notice in writing to our company; (iv) without special leave of absence from our board of directors, is absent from three consecutive meetings of the board and the board resolves that his office be vacated; (v) is prohibited by law or the Listing Rules of the Nasdaq Global Market from being a director; or (vi) is removed from office pursuant to any other provisions of our post-offering amended and restated memorandum and articles of association. ​ Board Diversity ​ The board diversity matrix is set out below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Board Diversity Matrix (As of the Date of This Annual Report) Country of Principal Executive Offices The People’s Republic of China Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No ​ ​ ​ Non- Did Not Disclose ​ ​ Female ​ Male Binary Gender Part I: Gender Identity Directors 2* 7 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction — LGBTQ+ — Did Not Disclose Demographic Background — * Including Ms.
A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found by our company to be of unsound mind; (iii) resigns by notice in writing to our company; (iv) without special leave of absence from our board of directors, is absent from three consecutive meetings of the board and the board resolves that his office be vacated; (v) is prohibited by law or the Listing Rules of the Nasdaq Global Market from being a director; or (vi) is removed from office pursuant to any other provisions of our post-offering amended and restated memorandum and articles of association.
The business address of Yumeng Wang is Suite 5704-5706, 57F, Two IFC, 8 Finance Street, Central, Hong Kong; the business address of Cuong Do is 660 Destacada Ave, Miami, United States FL 33156-8000; the business address of Mervyn Turner is MJ Turner Consulting LLC, Westfield, NJ, USA, and the business address of Li Zhu is 33345 7th St, Union City, CA, 94587-2128, United States. 178 Table of Contents (1) Represents 12,008,498 ordinary shares held by Peter Luo act-in-concert group, as set forth in note (2) below.
The business address of Cuong Do is 660 Destacada Ave, Miami, United States FL 33156-8000; and the business address of Li Zhu is 33345 7th St, Union City, CA, 94587-2128, United States. 186 Table of Contents (1) Represents 3,237,987 ordinary shares held by Peter Luo act-in-concert group, as set forth in note (2) below.
(2) Represents (i) 1,799,691 ordinary shares (including ordinary shares represented by the ADSs) held by Peter Luo; (ii) 337,415 ordinary shares underlying share options granted to Peter Luo that are vested or will be vested within 60 days of February 29, 2024, (iii) 1,075,000 ordinary shares held by Great Han Fortune LP for the benefit of Peter Luo and (iv) 33,333 ordinary shares held by Great Han Fortune LP for the benefit of Peter Luo that will be vested within 60 days of February 29, 2024; (v) 6,000,000 ordinary shares held by HAN 2020 Irrevocable Trust, for which Xiaohong She is the Trustee and may be deemed the beneficial owner; (vi) 52,198 ordinary shares held by Xiaohong She, who is the spouse of Peter Luo; (vii) 48,230 ordinary shares underlying share options granted to Xiaohong She that are vested or will be vested within 60 days of February 29, 2024, (viii) 230,000 ordinary shares held by Great Han Fortune LP for the benefit of Xiaohong She, (ix) 4,167 ordinary shares held by Great Han Fortune LP for the benefit of Xiaohong She that will be vested within 60 days of February 29, 2024; (x) total of 1,561,717 ordinary shares held by Raymond Tam, JC Xu, Qinghai Zhao and several key employees of the Company, and (xi) total of 866,747 share options granted to Raymond Tam, JC Xu, Qinghai Zhao and several key employees that are vested or will be vested within 60 days of February 29, 2024.
(2) Represents (i) 33,401 ordinary shares (including ordinary shares represented by the ADSs) held by Peter Luo; (ii) 587,415 ordinary shares underlying share options granted to Peter Luo that are vested or will be vested within 60 days of February 28, 2025, (iii) 191,667 ordinary shares held by Great Han Fortune LP for the benefit of Peter Luo; (iv) 4,817 ordinary shares held by Xiaohong She, who is the spouse of Peter Luo; (v) 98,230 ordinary shares underlying share options granted to Xiaohong She that are vested or will be vested within 60 days of February 28, 2025, (vi) 23,333 ordinary shares held by Great Han Fortune LP for the benefit of Xiaohong She, (vii) total of 1,598,121 ordinary shares (including ordinary shares represented by the ADSs) held by Raymond Tam, Qinghai Zhao and several key employees of the Company, and (viii) total of 701,003 share options granted to Raymond Tam, Qinghai Zhao and several key employees that are vested or will be vested within 60 days of February 28, 2025.
Alexander Goergen has served as our Head of Business Development since October 2017 when he joined the Company. Mr. Goergen has worked in various roles at the Covance, TRC and International AIDS Vaccine Initiative from October 2008 to October 2012. Prior to joining us, Alexander worked in business development for Catalent Pharma Solutions Biologics Division since October 2012. Mr.
Goergen has worked in various roles at the Covance, TRC and International AIDS Vaccine Initiative from October 2008 to October 2012. Prior to joining us, Alexander worked in business development for Catalent Pharma Solutions Biologics Division since October 2012. Mr. Goergen completed many licensing, manufacturing, and cell line development programs both domestically and internationally during his previous employment. Mr.
As required by regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments, including pension insurance, unemployment insurance, maternity insurance, work-related injury insurance, medical insurance and housing funds.
As a result of these efforts, we have generally been able to attract and retain qualified personnel and maintain a stable core management team. 184 Table of Contents As required by regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments, including pension insurance, unemployment insurance, maternity insurance, work-related injury insurance, medical insurance and housing funds.
Liu served as an assistant professor of the department of oncological science at Mount Sinai School of Medicine. Prior to joining us, Dr. Liu served as head of molecular cancer biology in CrownBio from October 2011 to September 2015. Dr. Liu served as our Head of Biology and Pharmacology from October 2015 to October 2023. Dr.
Liu served as head of molecular cancer biology in CrownBio from October 2011 to September 2015. Dr. Liu served as our Head of Biology and Pharmacology from October 2015 to October 2023. Dr.
Dr.Zhu has deep experience in corporate strategy, strategic collaborations and alliance management, especially his experience in negotiations and deal-making between Legend (a subsidiary of Genscript) and multinational pharmaceutical companies. Before joining GenScript, Dr. Zhu worked at California-based Clontech Laboratories, Inc. as a director of molecular biology from January 1990 to March 2000. Dr.
Zhu has served as director at GenScript and Legend Biotech since 2020 and is currently Chief Strategy Officer at Genscript Biotech Corporation. Dr.Zhu has deep experience in corporate strategy, strategic collaborations and alliance management, especially his experience in negotiations and deal-making between Legend (a subsidiary of Genscript) and multinational pharmaceutical companies. Before joining GenScript, Dr.
The holder is the depositary of our ADS program. In addition, 25.5% of our outstanding ordinary shares were held by record holders in the United States. Our principal shareholders do not have different voting rights. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. 6.F.
The holder is the depositary of our ADS program. In addition, 38.1% of our outstanding ordinary shares were held by record holders in the United States. Our principal shareholders do not have different voting rights.
For discussions of our accounting policies and estimates for awards granted pursuant to the 2019 Plan and 2021 Plan, see “Item 5 Operating and Financial Review and Prospects—Share-based compensation.” 6.C.
As of February 28, 2025, our award holders other than our directors and executive officers as a group held outstanding awards to purchase 6,206,138 ordinary shares. For discussions of our accounting policies and estimates for awards granted pursuant to the 2019 Plan and 2021 Plan, see “Item 5 Operating and Financial Review and Prospects—Share-based compensation.” 180 Table of Contents 6.C.
However, the Corporate Governance Rules of the Nasdaq permit foreign private issuers like us to follow “home country practice” in certain corporate governance matters. We rely on this “home country practice” exception and do not have a majority of independent directors serving on our board of directors , our compensation committee and our nominating and corporate governance committee.
The Corporate Governance Rules of the Nasdaq generally require that a majority of an issuer’s board of directors must consist of independent directors. However, the Corporate Governance Rules of the Nasdaq permit foreign private issuers like us to follow “home country practice” in certain corporate governance matters.
Zha has over forty publications in high-impact scientific journals, such as Cell, Science and Nature, and authored multiple patents. Dr. Zha received his M.D. degree in basic medicine from Shanghai Medical University in 1987 and Ph.D. degree in Microbiology and Immunology from University of Tennessee in 1993, and was Board-Certified in Anatomic Pathology by American Board of Pathology in 1999.
Zha received his M.D. degree in basic medicine from Shanghai Medical University in 1987 and Ph.D. degree in Microbiology and Immunology from University of Tennessee in 1993, and was Board-Certified in Anatomic Pathology by American Board of Pathology in 1999. Wenlin Zeng, Ph.D. has served as our Vice President of Early Stage CMC since June 2021. Dr.
He is a physician scientist with over 20 years of formative experience in both academia and biotech industry. Dr. Zha has served as executive director of translational sciences at NGM Biopharmaceuticals from April 2017 to September 2021, and held various leadership positions at MedImmune, Crown Bioscience, Genentech from November 2003 to March 2017. Dr.
Zha has served as executive director of translational sciences at NGM Biopharmaceuticals from April 2017 to September 2021, and held various leadership positions at MedImmune, Crown Bioscience, Genentech from November 2003 to March 2017. Dr. Zha has over forty publications in high-impact scientific journals, such as Cell, Science and Nature, and authored multiple patents. Dr.
The current term of our independent directors, namely Andy (Yiu Leung) Cheung and Mervyn Turner, is one-year from the date of filing of this annual report on Form 20-F. The initial term of our independent director Cuong Do is two-year from the effectiveness of the appointment.
The initial term of our independent director Cuong Do is two-year from the effectiveness of the appointment and has been renewed to upon filing of our annual report on Form 20-F for 2025.
(4) Represents 4,826,037 ordinary shares held by Asia Ventures II L.P., a limited partnership incorporated in the Bermuda. The general partner of Asia Ventures II L.P. is Asia Partners II L.P. a Bermuda exempt limited partnership. The general partner of Asia Partners II L.P. is Eight Roads GP, who is ultimately controlled by Eight Roads Holdings Limited.
(4) Represents 4,093,500 ordinary shares, consisting of (i) 2 ordinary shares and (ii) 4,093,498 ordinary shares in the form of ADSs, are held of record by Asia Ventures II L.P., a limited partnership incorporated in the Bermuda. The general partner of Asia Ventures II L.P. is Asia Partners II L.P. a Bermuda exempt limited partnership.
D. ​ 60,000 ​ $ 1.33 ​ December 2023 ​ December 2033 Qinghai Zhao, Ph. D. * ​ $ 2.26 October 2020 October 2030 Qinghai Zhao, Ph. D. ​ * ​ $ 5.6 ​ February 2022 ​ February 2032 Qinghai Zhao, Ph. D. ​ * ​ $ 1.06 ​ December 2022 ​ December 2032 Qinghai Zhao, Ph.
D. ​ * ​ $ 5.6 ​ February 2022 ​ February 2032 Qinghai Zhao, Ph. D. ​ * ​ $ 1.04 ​ May 2023 ​ May 2033 Qinghai Zhao, Ph. D. ​ * ​ $ 1.33 ​ December 2023 ​ December 2033 Qinghai Zhao, Ph. D. ​ * ​ $ — ​ July 2024 ​ — Qinghai Zhao, Ph.
She received her bachelor’s degree in mass communication/public relations from Boston University in 1992. 166 Table of Contents Dana Hu-Lowe, Ph.D. is currently our Vice President of Global Product Team Leadership. Dr.
Zeng received her bachelor’s degree in cell biology from Wuhan University in 1983 and Ph.D. degree in biochemistry from the University of Iowa in 1990. Dana Hu-Lowe, Ph.D. is currently our Vice President of Global Product Team Leadership. Dr.
These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned as of February 29, 2024 ​ ​ Number ​ %* ​ Directors and Executive Officers:† Peter Luo(1) 12,008,498 ​ 21.8 % JC Xu ** ** % Qinghai Zhao ** ** % Man Kin (Raymond) Tam ** ** % Chunfang (Vicky) Gu ​ ** ​ ** % Ling (Jolin) Zhou ​ ** ​ ** % Non-employee Directors Yumeng Wang — — % Andy (Yiu Leung) Cheung (independent director) ** ** % Cuong Do (independent director) ​ ** ​ ** % Mervyn Turner (independent director) ​ ** ​ ** % Zhu Li (independent director) ​ ** ​ ** % Ulf Drawunder (independent director) ​ — ​ — % All directors and executive officers as a group 12,303,123 22.3 % ​ ​ ​ ​ ​ ​ Principal Shareholders: ​ ​ Peter Luo act-in-concert group(2) 12,008,498 21.8 % JSR Limited(3) 5,340,742 9.7 % Asia Ventures II L.P.(4) 4,826,037 8.7 % F-Prime Capital Partners Healthcare Fund III LP(5) 3,382,237 6.1 % Wuxi Pharmatech Healthcare Fund I L.P.(6) 4,982,740 9.0 % General Atlantic Singapore AI Pte.
In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant, or other right or the conversion of any other security. 185 Table of Contents These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned as of February 28, 2025 ​ ​ Number %* ​ Directors and Executive Officers:† Peter Luo (1) 3,237,987 ​ 5.4 % Qinghai Zhao ** ** % Man Kin (Raymond) Tam ** ** % Chunfang (Vicky) Gu ​ ** ​ ** % Ling (Jolin) Zhou ​ ** ​ ** % Non-employee Directors Andy (Yiu Leung) Cheung (independent director) ** ** % Cuong Do (independent director) ​ ** ​ ** % Zhu Li (independent director) ​ ** ​ ** % Ulf Grawunder (independent director) ​ — ​ — % All directors and executive officers as a group 3,427,612 5.7 % ​ ​ ​ ​ ​ ​ Principal Shareholders: ​ ​ Peter Luo act-in-concert group (2) 3,237,987 5.4 % JSR Limited (3) 5,340,740 9.1 % Asia Ventures II L.P.
The registered address of Asia Ventures II L.P. is Pembroke Hall, 42 Crow Lane, Pembroke, Bermuda HM 19. Information set forth above is based upon FIL Ltd’s Schedule 13G filing with the SEC on February 19, 2021. (5) Represents 3,382,237 ordinary shares held by F-Prime Capital Partners Healthcare Fund III LP.
The general partner of Asia Partners II L.P. is Eight Roads GP, who is ultimately controlled by Eight Roads Holdings Limited. The registered address of Asia Ventures II L.P. is Pembroke Hall, 42 Crow Lane, Pembroke, Bermuda HM 19. Information set forth above is based upon FIL Limited’s Schedule 13G/A filing with the SEC on February 12, 2025.
The calculations in the table below are based on 55,196,230 ordinary shares issued and outstanding as of February 29, 2024, excluding the 285,000 ordinary shares, issued but deemed to be not outstanding as of February 29, 2024, held by Great Han Fortune LP. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
The calculations in the table below are based on 58,886,944 ordinary shares issued and outstanding as of February 28, 2025. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
F-Prime Capital Partners Healthcare Advisors Fund III LP is the general partner of F-Prime Capital Partners Healthcare Fund III LP. F-Prime Capital Partners Healthcare Advisors Fund III LP is solely managed by Impresa Management LLC, its general partner and investment manager.
F-Prime Capital Partners Healthcare Advisors Fund III LP is solely managed by Impresa Management LLC, its general partner and investment manager. Each of the entities listed above expressly disclaims beneficial ownership of the securities listed above except to the extent of any pecuniary interest therein. The address of these entities is 245 Summer Street, Boston, MA 02210.
James Huang is the sole owner of Panacea Innovation Limited, which is the sole owner of Panacea Venture Healthcare Fund II GP Company, Ltd., which is the general partner of Panacea Venture Healthcare Fund II, L.P. The registered address of Panacea Venture Healthcare Fund II, L.P. is c/o Maples Corporate Services Limited, Ugland House, Grand Cayman KY1-1104, Cayman Islands.
(8) Represents 3,037,500 ordinary shares held by Panacea Venture Healthcare Fund II, L.P., a limited partnership incorporated in the Cayman Islands. James Huang is the sole owner of Panacea Innovation Limited, which is the sole owner of Panacea Venture Healthcare Fund II GP Company, Ltd., which is the general partner of Panacea Venture Healthcare Fund II, L.P.
The initial term of our independent director Li Zhu is one-year from the effectiveness of the appointment. The Board has decided to renew Andy (Yiu Leung) Cheung, Mervyn Turner and Man Kin (Raymond) Tam’s term of director position for one year.
The Board has decided to renew Andy (Yiu Leung) Cheung, Ulf Grawunder and Man Kin (Raymond) Tam’s term of director position to the filing of our annual report on Form 20-F for 2025.
Songmao Zheng, Ph.D. is currently our Vice President, Head of Clinical and Quantitative Pharmacology, and leads quantitative model-informed drug discovery and development in both preclinical and clinical space. Prior to joining us, Dr. Zheng had served as Scientific Director/Group Leader, leading numerous biologics programs at Janssen BioTherapeutics, Janssen R&D since 2013. Dr.
Goergen received his bachelor’s degree in Chemistry from Lafayette College in 2008 and master’s degree in Biotechnology from the University of Wisconsin-Madison in 2011. Songmao Zheng, Ph.D. is currently our Vice President, Head of Clinical and Quantitative Pharmacology, and leads quantitative model-informed drug discovery and development in both preclinical and clinical space. Prior to joining us, Dr.
Liu has over 15 years of experience in drug discovery and development, both in small molecule kinase inhibitors and large molecule antibodies in oncology and immunology field. He has published over 40 peer-reviewed papers in high-profile journals involving key signalling pathways and targets in cancer biology. From July 2007 to August 2011, Dr.
Liu has over 15 years of experience in drug discovery and development, both in small molecule kinase inhibitors and large molecule antibodies in oncology and immunology field. From July 2007 to August 2011, Dr. Liu served as an assistant professor of the department of oncological science at Mount Sinai School of Medicine. Prior to joining us, Dr.
Information set forth above is based upon General Atlantic, L.P.’s Schedule 13G filing with the SEC on February 11, 2022. (8) Represents 2,750,000 ordinary shares held by Panacea Venture Healthcare Fund II, L.P., a limited partnership incorporated in the Cayman Islands.
The registered address of Panacea Venture Healthcare Fund II, L.P. is c/o Maples Corporate Services Limited, Ugland House, Grand Cayman KY1-1104, Cayman Islands. Information set forth above is based upon Panacea Venture Healthcare Fund II, L.P.’s Schedule 13G/A filing with the SEC on February 14, 2025.
Information set forth above is based upon Peter Luo’s Schedule 13D/A filing with the SEC on March 1, 2024.
Accordingly, beneficial ownership of the Han 2020 Irrevocable Trust is ceased to be attributed to Xiaohong She or Peter Luo. Information set forth above is based upon Peter Luo’s Schedule 13D/A filing with the SEC on February 19, 2025.
Board Practices Board of Directors Our board of directors consists of nine directors currently, including five independent directors, namely Andy (Yiu Leung) Cheung, Cuong Do, Mervyn Turner, Li Zhu and Ulf Grawunder, and eight directors from June 15, 2024 due to the effectiveness of Ms. Yan Li’s resignation.
Board Practices Board of Directors Our board of directors consists of six directors currently, including four independent directors, namely Andy (Yiu Leung) Cheung, Cuong Do, Li Zhu and Ulf Grawunder. A director is not required to hold any shares in our company to qualify to serve as a director.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Compensation—Employment Agreements and Indemnification Agreements.” Share Incentives See “Item 6 Directors, Senior Management and Employees—6.B. Compensation—Share Incentive Plan.” Other Related Party Transactions Transactions with WuXi AppTec Group We received research and development services from WuXi AppTec Group, the parent company of one of our principal shareholders. The amounts for the purchase of the services were US$0.8 million in 2023.
Employment Agreements and Indemnification Agreements See “Item 6 Directors, Senior Management and Employees—6.B. Compensation—Employment Agreements and Indemnification Agreements.” Share Incentives See “Item 6 Directors, Senior Management and Employees—6.B. Compensation—Share Incentive Plan.” Other Related Party Transactions Transactions with WuXi AppTec Group We received research and development services from WuXi AppTec Group, the parent company of one of our principal shareholders.
Related Party Transactions The following is a summary of transactions since January 1, 2023 to which we have been a participant in which any of our then directors, executive officers or holders of more than 10% of any class of our voting securities at the time of such transaction, or any members of their immediate family, had or will have a direct or indirect material interest. 180 Table of Contents Employment Agreements and Indemnification Agreements See “Item 6 Directors, Senior Management and Employees—6.B.
Related Party Transactions The following is a summary of transactions since January 1, 2024 to which we have been a participant in which any of our then directors, executive officers or holders of more than 10% of any class of our voting securities at the time of such transaction, or any members of their immediate family, had or will have a direct or indirect material interest.
As of December 31, 2023, the amounts due to WuXi AppTec Group were US$0.3 million. Transactions with WuXi Biologics (Cayman) Inc. or WuXi Biologics We received research and development services, including provision of manufacturing and quality control testing services, from WuXi Biologics, an entity controlled by the ultimate controlling party of one of our principal shareholders.
Transactions with WuXi Biologics (Cayman) Inc. or WuXi Biologics We received research and development services, including provision of manufacturing and quality control testing services, from WuXi Biologics, an entity controlled by the ultimate controlling party of one of our principal shareholders. The amounts for the purchase of the services were US$1.5 million in 2024.
The amounts for the purchase of the services were US$1.9 million in 2023. As of December 31, 2023, the amounts due to WuXi Biologics were US$16.4 million. ​ 7.C. Interests of Experts and Counsel Not applicable.
As of December 31, 2024, the amounts due to WuXi Biologics were US$12.6 million. ​ 7.C. Interests of Experts and Counsel Not applicable.
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The amounts for the purchase of the services were US$0.5 million in 2024. As of December 31, 2024, the amounts due to WuXi AppTec Group were US$0.6 million.

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